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Domestic resource mobilization has potential to finance development


“Domestic Revenue Mobilization: Realizing the Potential”, a side event during the Third Financing for Development conference discussed key challenges facing domestic revenue mobilization as well as  progress made to date.

The event, co-sponsored by World Bank and International Monetary Fund (IMF) also highlighted ongoing activities and future plans by the two institutions to address the issues raised.

African Development Bank Group President, Donald Kaberuka, attended the forum, where he dialogued with World Bank President Jim Kim on what their respective institutions have been doing to assist countries to improve their revenue policy and administration environments.

 According to President Kaberuka, in non-resource rich countries, one key opportunity is to better exploit existing tax sources that are efficient in raising revenues, such as consumption taxes. He said: “The bases of these taxes remain very narrow in many countries, and their administration is very complex due to exemptions and preferences as well as other issues regarding the tax structures. And at the same time, of course, we need to make sure that the tax system, taken together with the spending it finances, protects the very poorest of our citizens.”

“And tax administrations need to improve both their services to taxpayers and the transparency of their operations. Despite progress in a number of areas, such as the use of information technology, better training, and restructuring of agencies, many tax and customs administrations still operate ineffectively, and with a high degree of opacity. This needs to change,” he added.

World Bank’s Kim cited the new joint initiative between his institution and IMF, that aims at  expanding the international tax work of the two agencies, and supporting developing countries to strengthen their tax systems.

Also present was Min Zhu, IMF’s Deputy Managing Director, who said intensifying tax raising measures would ensure additional revenues that would help countries fill financial gaps thus promoting their development.

The panelists made remarks on issues concerning domestic resource mobilization and its value within the context of financing for development and the post 2015 development agenda.

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