IFS launches new centre on taxation in developing countries

Today marks the start of the new Centre for Tax Analysis in Developing Countries (TAXDEV) at the Institute for Fiscal Studies. Funded by a 26 month accountable grant from the Department for International Development (DfID), TAXDEV will coordinate and conduct a programme of research, policy analysis, and capacity building on tax administration and policy, and associated areas of social protection policy, in developing countries.

TAXDEV’s programme will consist of two main components. The first involves working with governments and other stakeholders in two specific developing countries – Ethiopia and Ghana – to co-produce modeling tools and analyses of the key tax and benefit policy and administration issues these countries face. As well as informing decisions in particular policy areas, this co-production methodology will help foster in-country analytical capacity and help embed quantitative analysis of policies in the policymaking and evaluation process. TAXDEV researchers have already engaged with civil servants and other stakeholders in these countries and will be travelling to Ethiopia and Ghana in the next few months to further develop initial project ideas. Projects are anticipated to start by the summer.

The second component of the programme is broader research on taxation in developing countries. This will focus on understanding how the changing economic and administrative constraints as countries develop affects what makes good tax policy, and the impacts of tax policies and administration systems on revenue raising capabilities and on households, businesses and the economy. This will build on existing research, new empirical and theoretical findings, and outputs from the analyses generated in Ethiopia and Ghana.

TAXDEV’s director will be IFS Senior Research Economist Laura Abramovsky, who will be supported by deputy director, IFS Senior Research Economist David Phillips. IFS researchers as well as senior academics and IFS research associates and fellows from around the world will also be working in this major new initiative, which if successful will hopefully expand in future years.

IFS Director Paul Johnson, who will be Chair of TAXDEV said “Designing effective tax policy requires good empirical evidence on the effects of different policy options on people and businesses. This evidence is too often lacking in developing countries. Our new DfID-funded TAXDEV initiative is designed to help address this, and to help build the capacity of the governments of Ethiopia and Ghana to undertake their own research and analysis of the key tax policy issues they face”.