- Revenue: funding to deliver the services citizens need
- Redistribution: to address poverty and inequality
- Representation: building accountability of governments to citizens and reclaiming policy space
- Repricing: limiting public ‘bads’; encouraging public ‘goods’
- Domestic constraints
- External influence on tax policy
- Financial secrecy leading to tax evasion and avoidance
The link between taxation and development is fundamental. A functioning state that can meet the basic needs of its citizens must rely ultimately on its own revenues to meet development objectives. Using the tax system, the state can mobilise domestic resources, redistribute wealth and provide essential services and infrastructure. Effective tax structures can also create incentives to improve governance, strengthening channels of political representation and reducing corruption.
However, governments across the world struggle to collect enough taxes to fund essential services in a fair way. Southern governments in particular face serious challenges as a result of weak and under-resourced revenue authorities, large informal sectors, pressure to offer overly generous tax breaks, and the exploitation of tax loopholes by unscrupulous companies and rich individuals.Too often tax systems are heavily skewed against the interests of the poorest.
This chapter provides:
- an introduction to tax justice issues, with explanations and definitions of key tax terms
- an overview of why tax matters for economic and social justice; and of the ways in which governments are often deprived of vital tax revenues
- case study examples to illustrate the range of campaigning by citizens and organisations across the world for fairer tax systems, for tax justice. These examples show that – whether you are working on poverty and social exclusion; access to essential services; aid, debt or trade; governance and accountability; or the impacts of mining or other foreign investment on local communities – advocacy on tax justice can help you achieve your objectives.
The chapter ends with an interaction page which suggests an exercise to facilitate a group discussion on the main themes raised in this chapter.