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Many low income countries face a trilemma with respect to taxation: (1) There is an urgent and obvious need for more revenues to enable resource poor states to provide and maintain even the most basic public services. (2) The reality is, however, that those with political power and economic ability are few and do not want to pay tax. (3) Moreover, those without political power are many, have almost nothing to tax, and do also resist paying taxes. It follows that the challenge for taxation is to raise domestic revenues from consenting citizens in poor and increasingly open economies. Elected governments in poor countries are therefore facing hard choices about taxation. These decisions will most likely have profound impacts on the future of democratisation itself and on public service provision. They will also have considerable implications for the politics and sustainability of aid. This situation forms the general motivation for the ongoing research programme 'Taxation, aid and democracy'. The research aims to contribute to a better understanding of the evolution of tax systems in selected sub-Saharan African countries. Furthermore, it aims to explore the constraints and options available for policy making and implementation on revenue mobilisation in light of current political, economic and administrative reforms. In depth studies on the tax systems in Namibia, Tanzania and Uganda have been carried out. Moreover, on specific issues such as tax administration and local government finances, the research has also covered other sub-Saharan countries, including South Africa and Zambia. This report presents the major areas of research dealt with in the programme and key findings.

Odd-Helge Fjeldstad

Research Professor, Coordinator: Tax and Public Finance

Lise Rakner

Professor at University of Bergen and Affiliated Research Professor