Financing the Developmental State: Tax and Revenue Issues

ABSTRACT

Asian developmental states do not rely on high levels of taxation. Their key features are the capacity to commit and intervene credibly in the form of policies directed towards growth rather than taxation. These features are often lacking in sub-Saharan Africa where the problem is compounded by three main constraints that prevent taxation from financing African states in a developmental way: their dependence on commodities, the effects of trade liberalisation, and the impact of aid, which provides incentives that may undermine the tax structures and key institutions of recipient countries.