Public Economics

Administrative tax and audit data from Rwanda shows that e-invoicing can help increase tax compliance if designed and implemented efficiently and alongside an effective tax audit strategy.

In Ecuador, royalties from oil extraction have increased average educational attainment and generated good jobs in the formal sector, despite reducing incentives to pursue tertiary education.

Governments must make targeted investments in their tax capacity to increase tax revenues

What roles does taxation play in reducing high levels of inequality in low- and middle-income countries?

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.

Electronic payment cards leave a digital trail that can be used for tax enforcement, but tax compliance may not increase if firms also trade in cash

When thinking about VAT incidence in countries with high registration thresholds it is important to consider the impact on VAT-unregistered firms. Their interaction with the VAT system matters for progressivity and introduces distortionary effects on product quality.

A non-contributory government pension in Chile raised life expectancy of the elderly poor, increasing food consumption and visits to health centres, and also had important knock-on effects on relatives living in the same household

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.