Taxation and Development: What Have We Learned from Fifty Years of Research?

We have learned a great deal about taxation and development over the last half-century but even the best research answers to particular questions have been difficult to apply in practice. The standard approach to tax and development has undergone a number of major model changes over the years but no magical fiscal medicine suitable for all has been found. This brief paper provides a perspective on a half century of research on taxation and development and notes some questions that call for more research. Moreover, since even the best research is only one of many inputs shaping public policy to some extent the task is not so much to improve research as to improve how we market what we learn to those who can, if they wish, put the knowledge to use. Building up adequate institutional capacity in the tax field, both inside and outside government, is critical to being able to adapt policies to changing circumstances and needs, thus ensuring some degree of robustness and resiliency. The role of outsiders like academics and aid agencies in this process is more to be supportive when countries want to reform their systems than to tell them when and how to do it.