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Domestic revenue mobilization and the role of data

Government revenues are central to funding public expenditures in all countries. Increasingly, developing countries must look to raise domestic revenue through taxes as they have very large spending needs on human development, education, health, and job creation. All of these are expensive, and aid and private finance alone simply cannot do the job.

Furthermore, in order to meet the financing needs of the Sustainable Development Goals countries cannot just rely on external finance. This reality is reflected in SDG17.

Strengthen domestic resource mobilization, including through international support to developing countries, to improve domestic capacity for tax and other revenue collection. SDG target 17.1

A key barrier to achieving this for policy makers, as well as researchers looking to provide guidance, is that we haven’t had in the past consistent data on revenues across and within countries.

The Government Revenue Dataset

The Government Revenue Dataset (GRD) aims to remedy this, and offers the prospect for policy makers to take a hard look at their own revenue systems. Using the GRD governments can benchmark themselves against comparable countries and get a sense of whether they are progressing in terms of mobilizing more tax revenue, or whether they need to try harder in a particular area — such as VAT, corporate taxation, or the taxation of mining.

UNU-WIDER now has in-house expertise to work on this data. The data comes from various sources including existing datasets. But one problem is that data is often not consistent between the sources; thus a key benefit of the GRD is that it introduces some consistency to data on tax, as well as filling in some of the data gaps. We recently interviewed our Chief Economist and Deputy Director Tony Addison on the GRD, you can view his thoughts below.

Citizens are taxpayers

In a democracy, citizens are taxpayers and they want to know what their money is being used for. They also want to know where all the taxes are coming from; are they coming from VAT, are mining companies being taxed enough, are corporate taxes effective? This kind of information really underpins the democratic contract between a government and its citizens.

We at UNU-WIDER want to see more governments, more researchers, and more policy makers using the database. We hope that over time the Government Revenue Database will become the gold standard for governments to look at as they think about their own tax reforms. You can read more about the GRD and download the dataset on our website.

The views expressed in this piece are those of the author(s), and do not necessarily reflect the views of the Institute or the United Nations University, nor the programme/project donors.

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Updated Government Revenue Dataset provides new insights into developing country tax collection trends
Updated Government Revenue Dataset provides new insights into developing country tax collection trends