Queen Elizabeth House Working Paper No. 129. Abstract
Domestic revenue mobilisation is key to sustainable development
finance – only self-sufficiency will allow the development of
fully-functioning states with flourishing systems of political
representation and economies reflecting societies’ expressed
preferences in regard to, for example, inequality. Tax evasion
and tax avoidance are important insofar as they affect both the
volume and nature of government finances. This paper estimates
the total cost to developing countries of these leakages as
US$385 billion annually, dwarfing any potential increase in aid.
An additional result suggests that doubling aid to low income
countries may have little positive revenue effect but damage the
strength of political representation, if full trade liberalisation is
simultaneously required.
