Briefing Paper

Should we engage in development cooperation with countries that have a notoriously low tax ratio?

von Haldenwang, Christian / Philipp Krause
Briefing Paper (12/2009)

Bonn: German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE)

Some countries fail to ensure that their citizens and businesses make an appropriate contribution to the financing of public tasks. In such cases one can think of a number of reasons for reducing development cooperation or even stopping it altogether. But not all countries with a low tax ratio automatically fall into this category. Development policy should analyze countries carefully. It should not, however, shrink from linking resource allocation to the strengthening of tax systems if a partner country consistently fails to make efforts to increase its own revenues.