Institute of Development Studies

Better systems of taxation, not aid, is what developing countries really need.

28 March 2011

IDS' recent event at the House of Commons examined how better systems of taxation can reduce developing countries' dependence on international aid. The event on 23 March 2011 was chaired by Ann McKechin MP, chair of the All Party Parliamentary Group for Debt, Aid and Trade.

The end of an era for 'big aid'

Professor Mick Moore, Fellow at IDS and Chief Executive of the newly established International Centre for Taxation and Development (ICTD) led the panel discussion. Professor Moore welcomed the change in attitudes towards revenue collection and taxation in developing countries within the international development community.

Leading organisations such as the IMF, OECD and European Parliament are all actively debating how taxation represents a far more reliable source of funding for developing countries than international aid. Better systems of taxation in turn lead to improved governance, greater accountability and more positive and active engagement between citizens and the state

Political will and leadership

Rushanara Ali MP, Shadow International Development Minister echoed Professor Moore's words, and said how encouraged she was about the growing discussion around taxation and development. Developing countries don't want to be endlessly dependent on aid. Ms Ali said there was a clear need for stronger political leadership around this matter and that consensus and political will have to be built across the political spectrum.

The ongoing challenges

Strong political leadership will be essential to overcome some of the key challenges, which Alex Cobham from Christian Aid highlighted in his contribution to the debate. Alex highlighted the ongoing problems of tax evasion by large multinational companies and their lack of transparency which hinders developing countries' ability to collect taxes. However Alex did say that the support given by the UK government to building the capacity of tax authorities has been largely effective.

Sustainability and self-sufficiency

Contributions from Anas Sarwar MP (Member of the International Development Select Committee), Lord McConnell (Chair of the Labour Policy Forum on conflict and development) and Mark Lazarowicz (Shadow Minister for International Development) all supported the notion that further action was needed with Rushanara Ali concluding that the issue of taxation was pivotal in helping developing countries to become self-sufficient and build sustainable economies.

Related Events

Better systems of taxation and less foreign aid is what developing countries really need

Dates: 23 Mar 2011

Related Projects

• International Centre for Tax and Development - This 5 year research consortium aims to build a stronger evidence base for those seeking to develop more effective and legitimate institutions that deliver improved outcomes for poor people. (Ongoing)