The centre for tax analysis in developing countries

Overseas Development Institue Institue for Fiscal Studies

Introduction to our research

TaxDev’s research explores the impacts of tax policy and administration on revenue raising capabilities, households, businesses and the economy more widely; and examines how tax policy design responds to changing economic and administrative constraints.

We work with policymakers and researchers across a range of countries in Africa, Asia, and South America to undertake in-depth research, informed by the priorities of our government partners, using large-scale administrative datasets or field surveys, innovative empirical methodologies and experimental designs, and drawing lessons and insights from across countries. 

Our research themes are as follows:

1. Equity, incidence and social protection

Understanding how the tax and transfer system impacts upon the distribution of income is crucial to assessing whether it is supporting inclusive development and social protection objectives. Fundamental to analysing the redistributive effects of the system, however, is assessing who is actually bearing the economic burden of taxation and seeing their incomes increase as a result of transfers. This issue is complicated in many low- and middle-income countries, where assumptions about incidence may need to be re-assessed due to the presence of large informal and non-market sectors. This theme aims to improve our understanding of these important issues around the incidence, targeting and distributional impact of taxes and transfers.

2. Revenues, efficiency and taxpayer behaviour

Tax systems can have significant impacts on the incentives and the behaviour of firms, individuals and consumers and such responses should be accounted for in a complete and rigorous analysis. This theme explores how tax systems affect behaviour in contexts where the structure and administration of the system, as well as the wider economic, political and institutional characteristics of society, are different to those in high-income countries.

3. Administration, compliance and enforcement

Raising revenue efficiently and fairly requires not only well-designed tax policy but also an effective and context-appropriate system of tax administration. This theme examines how a range of administrative policies and technological innovations can affect administration costs, taxpayer compliance and behaviour, and tax revenues. 

4. Understanding and improving the policymaking process

Improving the evidence base is not in and of itself sufficient for making better tax policy. Decisions are frequently affected by wider political and institutional factors and high-quality research should have clear pathways to the political sphere in order to achieve impact. This theme seeks to better understand how policy decisions are currently made, whether changes to the process could make it more likely that better data and more in-depth analysis will influence policy outcomes, and if so, what can be done to bring about those changes. 

Project and publication highlights

Project

Electronic payments and tax compliance

The impact of payment technology on tax revenues: evidence from India’s demonetization experiment ...

Electronic Payment

Publication

The impact of VAT and turnover taxes on firms’ supply chain choices: evidence from India

This note summarises ongoing work being undertaken by Lucie Gadenne, Tushar Nandi and Roland Rathelot on the scale an...

Project

Informality, consumption taxes and redistribution

Can consumption taxes reduce inequality in developing countries?...

fruit market

Publication

How tax officials in lower-income countries can respond to the coronavirus pandemic

This paper was produced as part of the FCDO funded Centre for Tax Analysis in Developing Countries (TaxDev) project....

Project

Two-tier tax systems and firms: evidence from Brazil

Two-tier tax systems and firms: evidence from Brazil...

Brazil
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