Tax Policy Challenges in the 21st Century

S. 506I. Introduction

“Taxes are how we pool our money for public health and safety, infrastructure, research, and services from the development of vaccines and the Internet to public schools and universities, transportation, courts, police, parks, and safe drinking water.”

A government needs revenue to carry on its societal and other functions. With an ever-increasing need to raise the economy’s Gross Domestic Product (GDP), a developing country is often seen struggling, trying to make the ends meet in the context of revenue received and expenditure borne. Taxes, unlike social security and pension contributions which are deemed to be in the nature of a social contract and which are directly linked to benefits, are perceived as confiscatory rather than contributory in nature, instead of their intended beneficial use. The structure of the government, its revenue administration and more so the work execution of its revenue sector are major factors responsible for a country‘s socio-economic development. Furthermore, with no fit-to-all specific solution, tax policies in developing countries vis-à-vis developed countries vary largely. Developing countries, unlike developed countries, are often ...