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In development finance, domestic resource mobilization is suddenly all the rage. The Addis Ababa Action Agenda adopted at the financing for development conference in 2015 listed "domestic public resources" as its first "action area." Even President Donald Trump, who has proposed to cut nearly every other aspect of United States foreign aid, proposed additional funding for a new domestic resource mobilization initiative in his budget request earlier this month.
Last week in New York, four of the biggest players in global development co-hosted the first global conference of the "Platform for Collaboration on Tax," an effort launched two years ago to help the World Bank, International Monetary Fund, United Nations, and Organization for Economic Co-operation and Development better coordinate their work on taxes in developing countries. These and other development donors and organizations are working with countries both to broaden their tax bases and increase public revenue, as well as to help them fight back against tax evasion and avoidance by multinational corporations.
Part of the purpose of the platform is to create toolkits and publications to help countries implement a series of measures put together by the OECD and G-20 to stem those tax evasion strategies, known as "base erosion and profit shifting" — or BEPS. Some civil society groups have challenged that this framework was developed without enough input from developing countries, and that it doesn’t go far enough to prevent them from exploitative tax practices.
The potential for increased tax revenues to put more money in the hands of governments — and for improvements in tax expenditure to help them use it for things like achieving the Sustainable Development Goals — is massive. At the conference, multiple speakers referenced a goal of raising revenues to 20 percent of gross domestic product. One-third of low-income countries, and 70 percent of fragile conflict-affected countries, are below this threshold, according to the World Bank.
Read the full article on tax collaboration and global dev by Michael Igoe at Devex International Development.