New tax scheme underway for economies
The World Bank and the International Monetary Fund (IMF) may be scripting new initiatives aimed at raving up the developing countries’ tax receipts.
The plan, which comes as part of efforts to bring developing countries’ interests into international dialogue, may be unveiled or expounded more at the “Financing for Development” conference, due to end yesterday, in Addis Ababa, Ethiopia.
The conference, billed to hosts heads of state, civil society organisations, multilateral institutions and private sector representatives, will discuss how to scale up finances to meet the newly initiated Sustainable Development Goals (SDGs).
In a statement from IMF, the new initiative to help developing countries strengthen their tax systems, was on the back of an analysis, which suggests that many lower-income countries have the potential to increase their tax ratios by at least two to four percent of the Gross Domestic Product without compromising fairness or growth.
Besides, enthroning a regime of revenue stream that would ensure raising additional income, without distorting growth, will allow developing countries to fill financing gaps and promote development.
“A strong revenue base is imperative if developing countries are to be able to finance the spending they need on public services, social support and infrastructure. But experience shows that with well-targeted external technical support and sufficient political will, it can be done,” IMF’s Managing Director, Christine Lagarde, said.
But the World Bank Group President, Jim Yong Kim, noted that financing gaps and promotion of inclusive growth are attainable if everyone pays their fair share of development obligations, “even while challenging the status quo.”
“We very much want to help developing countries raise more revenues through taxes because this can lead to more children receiving a good education and more families having access to quality health care,” he added.
The statement noted that the IMF/World Bank initiative has two pillars in response to country demands- deepening the dialogue with developing countries on international tax issues, aiming to help increase their weight and voice in the international debate on tax rules and cooperation; and developing improved diagnostic tools to help member countries evaluate and strengthen their tax policies.
Already, the initiative is riding on the back of the institutions’ current tax programmes in over 48 developing countries and the IMF’s technical assistance projects in over 120 countries.
“By further leveraging their collective expertise, the World Bank and IMF aim to play a fuller role in helping all of their member countries achieve the ambitious goals that the world will be setting for itself later this year in New York.
“Bringing the voice and interests of developing countries, particularly those too small to play a role at the G-20 level, into the debate on international tax policy issues is a key priority for the World Bank and IMF.
“The initiative will deepen the institutions’ ongoing collaboration with developing countries to identify key international tax policy concerns and potential solutions, both at the country level and in the context of the continuing international dialogue,” the statement said.
It noted that plans are underway for the institutions to strengthen their diagnostic tools, develop new methodologies where needed, to enable member countries to identify priority tax reforms and design the requisite support for their implementation.