This project examines the political economy factors which explain the design and structure of tax systems in LMICs, in order to deepen our understanding of how successful tax systems develop, why tax reforms succeed or fail, and why the gap in tax performance between higher and lower income countries persists. This research builds on a body of evidence produced under UNU-WIDER’s 2019–23 work programme on Transforming economies, states, and societies, in particular the work carried out for the Fiscal states – the origins and developmental implications project.

Key questions

• Taxation and the social contract: What are citizens and elites’ preferences for direct and indirect taxation? Does progressive taxation increase tax compliance? How do the elites respond to changes in taxation? When does trust in state institutions increase? Under what conditions do we see a shift from indirect to direct taxation?
• Taxation and the governance dividend: Does taxation improve governance? Which taxes are more likely to produce a governance dividend? Is it taxation on labour or taxation on capital that leads to a governance dividend? Focus on Africa: under what conditions do we see a governance dividend in this region?
• Taxation in resource rich economies: What political institutions may facilitate taxation in resource-abundant countries? Why do such political institutions emerge in some resource-abundant countries and not in others? Do we need these institutions in place prior to the discovery of natural resources? If so, for low-income countries that had already weak institutions of political accountability prior to the discovery of natural resources, how can the fiscal resource curse be avoided?  

Watch this space

All requests for research proposals, events, working papers, data updates, and journal articles related to this project will be available here.