• Report
  • 4 April 2016

Aiding domestic revenue mobilisation

Aid for domestic revenue mobilisation is at a turning point. It is vital to the success of the Sustainable Development Goals (SDGs) and is growing in promi

Our report provides an important evidence base on aid for domestic revenue mobilisation to date, and highlights important lessons that need to be taken forward to promote effectiveness and measurable results into the future.

Aid for domestic revenue mobilisation is at a turning point. It is vital to the success of the Sustainable Development Goals (SDGs) and is growing in prominence, with recent commitments by international actors to significantly scale up domestic revenue mobilisation through the Addis Tax Initiative.

Aiding domestic revenue mobilisation estimates the scale and nature of official development assistance (ODA or ‘aid’) for domestic revenue mobilisation. We focus in on case studies in Mozambique and Pakistan, and look at the landscape of ODA disbursements, showing that the UK, Norway and the EU are the largest providers of core aid (aid to projects whose primary objective is supporting a country’s domestic revenue mobilisation).

Our report also highlights the limited information at our disposal. The current lack of systems for reporting or monitoring aid for domestic revenue mobilisation means that even basic questions, such as how much is spent, where and how, are difficult to answer. Without this information it is difficult to monitor and evaluate results and ensure that new commitments drive measurable outcomes.

Key recommendations emerging from the report include:

  1. Improve reporting: create a specific purpose code for domestic revenue mobilisation within systems for reporting ODA expenditure through the Organisation for Economic Co-operation and Development (OECD) and International Aid Transparency (IATI) standard. Donors already report detailed information through these systems and adding a purpose code would introduce a simple framework for them to identify relevant projects.
  1. Focus on results: use growing clarity about what is being spent as a basis for enhanced knowledge sharing and understanding results. Any monitoring systems established should enable qualitative analysis of outcomes as well as monitoring inputs and promoting lesson learning. Donors report project information they should be encouraged to retrospectively detail the types of tax systems they have helped partner countries create, the amounts of revenue mobilised and the specific taxes they have helped to establish or improve.
  1. Enhance progressive and sustainable revenue mobilisation: more information, gained through improved reporting, should contribute to increased dialogue and better understanding of how aid for domestic revenue mobilisation can strengthen the design and implementation of progressive, sustainable tax policies and revenue mobilisation. This is in line with principles articulated in the Addis Ababa Action Agenda.

You can read our shorter briefing, based on this report, that was provided for the DCF Belgium High-level SymposiumRethinking development cooperation for the SDGs: country-level perspectives and lessons.

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Home page image credit: Martine Perret/UNMITugust 2011