Taxation matters for state-building. Bargaining over the budget and over tax policy is one of the primary ways in which different interests are reconciled in a democracy. For the sake of good governance in poor countries, tax reforms should simplify rules and procedures, include more taxpayers in the system and improve administrative bodies. For taxation to have a positive effect on governmental accountability in general, a majority of citizens must "feel" taxation. Otherwise, only minorities will demand participation and better services. Taxes, therefore, must not be confined to small numbers of large companies and rich people. They should affect the public at large. This requires that taxes should be levied as consensually and as transparently as possible. Moreover, the process will have to be a predictable, negotiated one, in which the taxpayer has the option of appealing to the judiciary in case of unjust treatment.
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