domestic resource mobilization - icgfm · domestic resource mobilization underpinning sustainable...
TRANSCRIPT
Kenneth A. Lanza Director Grant Thornton, LLC December 6, 2016
Domestic Resource Mobilization Underpinning Sustainable Development
I. DRM Defined
II. Development Priorities
III. Funding the SDGs
IV. Role of Donors
V. Moving Forward
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I. DRM Defined
• What it is: 1. Is a mix of Tax Systems. 2. Is Focused on increased
capture of domestic revenue sources-including debt—either through efficiency gains, raising rates, or expanding the base.
3. Is accountable, efficient and transparent processes.
• What it is not: 1. Not singularly about
increasing rates. 2. Not the only solution to
enhancing state revenue for social investment.
3. Not simple or easy to implement.
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II. Development Priorities Sustainable Development Goals (SDGs)
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II. Development Priorities
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A Different Perspective
Source: Global Poverty Research Centre 2008-2009
CPA Actual2014 2015 2016 2017 2018
Europe 5,543$ 4,501$ 4,723$ 4,800$ 4,648$ Africa 45,942$ 47,068$ 48,243$ 47,910$ 47,599$ America 8,681$ 7,964$ 8,143$ 8,083$ 7,883$ Asia 43,294$ 44,866$ 45,314$ 45,648$ 45,347$
Middle East 9,970$ 10,203$ 10,021$ 10,106$ 10,096$ South and Central Asia 21,022$ 22,255$ 22,664$ 22,769$ 22,593$
Far East Asia 11,518$ 11,456$ 11,634$ 11,758$ 11,611$ Asia, regional 784$ 952$ 995$ 1,015$ 1,047$
Oceania 1,820$ 1,883$ 1,912$ 1,935$ 1,964$ Thematic assistance -$ 1,721$ 1,770$ 1,800$ 1,534$ Total 105,280$ 108,003$ 110,104$ 110,176$ 108,975$
Constant 2013 USD millionRegion
CPA Planned
III. Funding – Official Development Assistance Country Program Assistance (CPA)
6 Source: OECD 2015
III. Funding – Official Development Assistance Total 2014 Net ODA Flows from Donor Countries
7 Source: OECD 2015
III. Funding – Official Development Assistance Financing the SDG Gap: Annual Funding Requirements (billions of 2013 US$)
8 Source: UN Sustainable Development 2015
III. Funding – Official Development Assistance Financing the SDG Gap: Annual Funding Requirements (billions of 2013 US$)
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III. Funding – DRM Donors
10 Source: 2014, Development Initiatives, OECD DAC Data
III. Funding – DRM Donors
Source: 2014, Development Initiatives, OECD DAC Data 11
1. Broaden the Tax Base
IV. Role of Donors
2. Develop Institutional Capacity
3. Address Corruption-Efficiency
4. Manage the Political Economy of Reform
5. Increase Growth-Competitiveness
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Key DRM Objectives
IV. Role of Donors
With gradual and incremental changes in tax laws in pursuit of higher tax revenues,tax structures often become complex in nature. Sometimes governments go for minor taxes and fees that are costly to comply with and administer.
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Broaden the Tax Base
IV. Role of Donors
Some countries with a VAT continue to have the old mindset. .
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Broaden the Tax Base
IV. Role of Donors
The Personal Income Tax (PIT) is generally weak and poorly managed. In developing countries, there is always a pressure on government for granting exemptions by interest groups under all taxes.
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Broaden the Tax Base
The corporate income tax (CIT) often has a narrow base focusing on foreign and large domestic companies. CIT on multinationals is always a concern as they have greater avenues for profit-shifting, transfer pricing and tax avoidance.
IV. Role of Donors
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Broaden the Tax Base
IV. Role of Donors
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Broaden the Tax Base: Medium rates of taxation by country income Group
IV. Role of Donors
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Develop Institutional Capacity
IV. Role of Donors
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Develop Institutional Capacity
IV. Role of Donors
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Efficiency – Addressing Corruption
IV. Role of Donors
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The Political Economy of DRM
5. Human Capital
4. Infrastructure
3. Institutions
1. Personal Security
9. Technological Readiness
8. Financial Market Efficiency
7. Labor Market Efficiency
6. Goods Market Efficiency
2. Macroeconomic Stability
Investment Economy
Factor Economy
Innovation Economy
10. Openness and Market Size
11. Business Sophistication
12. Innovation
IV. Role of Donors
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Competitive Economic Growth
Investment Economy
Factor Economy
Innovation Economy
IV. Role of Donors
Factor Economy: GDP P/C=$2000-2,999 52 countries (17 in transition)
Investment Economy: GDP P/C=$3000-17,000 49 countries (19 in transition)
Innovation Economy: GDP P/C= >$17,000 37 countries
2016-2017 Global Competitiveness Report, World Economic Forum 23
Competitive Economic Growth
IV. Role of Donors
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Competitive Economic Growth
V. Moving Forward
1. Focus on basics before tacking more difficult reforms. 2. DRM will contribute to the SDG funding gap. 3. Broad-based, sustainable, economic growth is the only way to increase
and sustain a tax base 4. Countries that have demonstrated the political will for DRM
reforms should be prioritized. 5. Donors should follow government leadership 6. Programs should balance revenue collection with fairness, equity
and governance considerations. 7. Transparency and broad-based dialogue should characterize all aspect
of DRM programs 8. Reforming and sustaining revenue collection institutions. 9. Programs should strengthen linkages between revenue and
expenditures 10. Take account of the international aspects of taxation.
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10 Lessons Learned for Donors Engagement in DRM
International Development Organizations Team
Scott King Managing Principal, IDO T: +1 210.881.1802 E:[email protected]@us.gt.com
Ken Lanza Director, Global USAID Account, IDO T: +1 703 637 3090 E: [email protected] [email protected]
Veronique Duchez-Pazhwak Manager, IDO T: +1 703.637.2781 E: [email protected] [email protected]
Melanie Douds Manager, IDO T: +1 703.562.5912 E: [email protected] [email protected]
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