Areas of Expertise

IDG can advise governments on tax policy and administration solutions to navigate the fundamental DRM tradeoff between, on the one hand, maximizing resources of the government for development purposes, and, on the other hand, minimizing any negative impact of the tax system on growth and job creation. A promising path for countries to reform their systems is to address, in parallel, personal income taxes and payroll taxes that are very high, particularly on low and middle-income workers, and, at the same time, Value-Added Tax (VAT) and other consumption taxes that often are riddled with loopholes and inefficiencies reducing total revenue collection, discouraging compliance, and encouraging rent-seeking behavior. Tax administration needs to emphasize taxpayer services for the bulk of payers and introduce risk-based enforcement, so that the compliance burden is reduced for compliant taxpayers and scarce enforcement resources are concentrated on firms that have a high probability of non-compliance.

We focus on tax policy and administration, policy and administration for non-tax revenues (such as concessions for natural resources), e- and mobile solutions for tax payments and filing, revenue forecasting, and public education. The Addis Tax Initiative (ATI) and the Sustainable Development Goals (SDGs) are two examples of international initiatives related to DRM that we often rely on.

Examples of ways in which we can assist counterparts are as follows:

• Training and advising in overall tax policy principles
• Developing revenue forecasting capabilities
• Conducting political economy analyses to identify feasible reforms
• Reducing labor taxes
• Fixing Value Added Tax (VAT) administration
• Creating large-taxpayer units
• Reforming general tax administration
• Introducing e- and mobile solutions
• Introducing revenue management information systems
• Developing own-source revenues at the subnational level