Development Aid and Low Tax Developing Countries

Cutting ODA or strengthening local tax systems?

For countries with low tax rates or lax enforcement of tax laws, the air is growing increasingly thin. Against the background of the present global financial and economic crisis, so-called tax havens are finding themselves faced with growing pressure to improve the transparency of their tax systems and discontinue unfair practices. A comment by Christian von Haldenwang

Also, developing countries are being called upon to do more to mobilise resources of their own. The European Commission, for instance, proposes to cut development funds for countries that fail to meet their commitments to establish good governance in tax matters. There are even some, sporadic, calls for discontinuation of development cooperation (ODA) with countries whose tax ratio (that is, the share of taxes and levies as a percentage of GDP) is below a threshold value of e.g. 20% ...

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