As Development Aid Evolves, Digitizing Tax Payments Can Have Dramatic Benefits for Emerging Economies
Monday, November 7, 2016
Every year, an estimated US$7.7 trillion worth of payments flow from people to governments worldwide. Not surprisingly, taxes make up a significant portion of these payments.
In 2015, a global agreement for financing the Sustainable Development Goals recognized domestic resource mobilization as essential to inclusive growth. This makes regular tax revenue more vital than ever to the future of many low-income countries.
Yet, the reality is that countries who need revenue the most are only just starting to take advantage of all the opportunities available to them. There is growing evidence that enabling people and businesses to pay taxes digitally can increase government revenue and produce a wide range of other benefits for society.
In Tanzania, our recent study found that the digitization of value-added tax payments could increase the country’s annual revenue by almost $500 million per year. The Ugandan city of Kampala has already experienced such success, boosting revenue by 167 percent in a single year after automating its tax collection system.
- Impact Assessment