Raising Revenue

• Author: Bernardin Akitoby
• Pages: 18-21

Five country cases illustrate how best to improve tax collection

Bernardin Akitoby

A typical developing ec onomy collects

just 15 percent of GDP in taxes, com-

pared with the 40 percent collected

by a typical adva nced economy. e

ability to collect ta xes is central to a countr y’s

capacity to f‌inance soci al services such as hea lth and

education, critical infra structure such as electricity

and roads, and other public goods. Considering t he

vast needs of poor countries, t his low level of tax

collection is putting economic development at risk.

How can policyma kers tackle thi s challenge?

A look at successful reforms between 2004 and

2015 in f‌ive low-income and emerging market

economies—which achieved some of the largest

revenue gains after t ax reform—of‌fers some

answers. e experiences of t his diverse set of

countries—Cambodia, Georgia, Guyana, Liberia,

and Ukraine —show that, rega rdless of the con-

straints they face, countries can st rengthen their

capacity to collect ta x revenue by pursuing reform

strategies with cer tain distinct features. We focus

here mainly on Georgia. By ana lyzing what worked

in that country we c an draw lessons for what strat-

egies other countries should consider.

Georgia of‌fers a strik ing example of successful t ax

revenue reform. Following the collapse of the Soviet

18 FINANCE & DEVELOPMENT | March 2018



Tbilisi, Georgia,

where reform

helped broaden

the tax base.