The purpose of this note is to provide a framework for improving tax policy design in fragile and conflict-affected states, which face political and institutional constraints. This note begins with an overview of experiences in revenue mobilization in fragile states, including relative to other country groups—in particular, nonfragile states and formerly fragile states; that is, countries that exited fragility during the period under study. A discussion follows of how the principles of tax policy design should be applied in fragile states, particularly the relative importance of the revenue objective vis-à-vis other objectives, such as equity and efficiency. The two sections that follow provide guidance on tax policy design in the emergency and consolidation phases, respectively, and discuss how governments can use tax policy to transition from one phase to another, eventually overcoming fragility. The note concludes with key lessons and a set of guiding principles for tax reform in fragile states.

The purpose of this note is to provide a framework for improving tax policy design in fragile and conflict-affected states, which face political and institutional constraints. This note begins with an overview of experiences in revenue mobilization in fragile states, including relative to other country groups—in particular, nonfragile states and formerly fragile states; that is, countries that exited fragility during the period under study. A discussion follows of how the principles of tax policy design should be applied in fragile states, particularly the relative importance of the revenue objective vis-à-vis other objectives, such as equity and efficiency. The two sections that follow provide guidance on tax policy design in the emergency and consolidation phases, respectively, and discuss how governments can use tax policy to transition from one phase to another, eventually overcoming fragility. The note concludes with key lessons and a set of guiding principles for tax reform in fragile states.

Setting macroeconomic policy is especially difficult in fragile states. Macroeconomic Policy in Fragile States addresses the many issues involved and considers ways to improve the effectiveness of macroeconomic management in the face of these constraints.

Overcoming state fragility is one of the most important international development objectives of the 21st century. Many fragile states have turned into failed states, where millions of people are caught in deprivation and seemingly hopeless conditions. Fragile states lack the authority, legitimacy, and capacity that a modern state needs to advance the development of its peoples, and present deep challenges for the design and implementation of development policy. For instance, how is aid to be designed and delivered in a way that will help people in fragile states if their governments lack capacity to absorb and use aid? And what can be done about adverse side-effects of fragile states on their neighbours and the global community, such as heightened insecurity, rising out-migration, displaced populations, and the destruction of natural resources? This book documents the far reaching global repercussions of state fragility and provides a timely contribution to the international discourse on three dimensions of fragile states: their causes, costs, and the responses required. It will appeal to scholars, policymakers, and donors who are concerned about conflict and development. Its aim is to contribute to our understanding of how strong and accountable states can be fostered-states where government and civil society progressively advance human wellbeing, underpin households' resilience in the face of shocks, and form effective partnerships to maximize the benefits of development assistance.

How can Low-Income Countries (LICs) enhance tax revenue collection to finance their vast development needs? We address this question by analyzing seven tax reform experiences in LICs (Burkina Faso, The Gambia, Maldives, Mauritania, Rwanda, Senegal, and Uganda). Three lessons stand out, although reforms must be tailored to individual circumstances: (i) Tax reforms require first and foremost political commitment and buy-in from key stakeholders; (ii) Countries that pursue both revenue administration and tax policy reforms tend to see much larger and persistent gains; and (iii) A successful strategy often starts with fiscal reform measures with immediate effect to build momentum. These can include: simplifying the tax system; curbing exemptions; reforming indirect taxes on goods and services (e.g., excises); and better managing compliance risks through strengthening taxpayer segmentation (often beginning with strengthening the Large Taxpayers Office). A comprehensive reform strategy (e.g., a medium-term revenue strategy) can help to properly sequence reform measures and facilitate their implementation.

Tax administration improvements have contributed significantly to a doubling of China’s tax-to-GDP ratio and the substantial reduction in taxpayers’ compliance costs since the mid-1990s. This paper describes the key features of China’s tax administration and their evolution over the last 20 years. It also identifes emerging challenges to the tax system and areas where further tax administration improvements are needed to sustain tax revenue and reduce taxpayers’ compliance costs in the future.

This paper addresses core challenges that all tax administrations face in dealing with noncompliance—which are now receiving renewed attention. Long a priority in developing countries, assuring strong compliance has acquired greater priority in countries facing intensified revenue needs, and is critical for fairness and statebuilding. Series: Policy Papers

States of Fragility 2020 sets a policy agenda for fragility at a critical turning point: the final countdown on Agenda 2030 is at hand, and the pandemic has reversed hard-fought gains. This report examines fragility as a story in two parts: the global state of fragility that existed before COVID-19, and the dramatic impact the pandemic is having on that landscape.

How do countries mobilize large tax revenue—defined as an average increase in the tax-to-GDP ratio of 0.5 percent per year over three years or more? To answer this question, we build a novel dataset covering 55 episodes of large tax revenue mobilization in low-income countries and emerging markets. We find that: (i) reforms of indirect taxes and exemptions are the most common tax policy measures; (ii) multi-pronged tax administration reforms often go hand in hand with tax policy measures or are stand alone; and (iii) sustainability of the episodes hinges on tax administration reforms in the key compliance areas (risk-based audits, registration, filing, payment, and reporting).

Three years into the 2030 Agenda it is already apparent that those living in fragile contexts are the furthest behind. Not all forms of fragility make it to the public’s eye: fragility is an intricate beast, sometimes exposed, often lurking underneath, but always holding progress back. Conflict ...