Informality, compliance costs, and weak administrative capacity all constrain the effectiveness of VAT in lower-income countries. However, it is a crucial source of revenue that is better than the alternatives, so governments should focus on reforms that make the VAT more efficient.

What was the role of state capacity in the economic development of the US?

Reducing tax rates increases tax revenues when enforcement capacity is low. However, low-capacity states can invest in tax enforcement to shift up the revenue-maximising tax rate.

NGO provision of health services in rural Uganda either complemented or undermined government capacity, depending on the supply of skilled labour

Chile’s OECD-aligned tax reform did not shift transfer pricing behaviour or generate additional tax revenues.

Ghost firms help real firms evade significant sums in tax, but the tax authority developed an innovative way to recover the revenue from cheating firms

Uncertainty in the identity of an evaluator discourages evaluator-specific influence activities and significantly improves state employees’ performance

City chiefs collecting taxes in Kananga, DRC, outperformed state agents thanks to their superior local information about potential taxpayers

Political interference in the bureaucracy is generally viewed with suspicion. However, in India bureaucrats implement MNREGA much better in places where politicians are able to claim credit for improvements.