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Salter, David --- "Taxing Constraints on Developing Countries and the Global Economic Recession" [2010] ELECD 631; in Faundez, Julio; Tan, Celine (eds), "International Economic Law, Globalization and Developing Countries" (Edward Elgar Publishing, 2010)

Book Title: International Economic Law, Globalization and Developing Countries

Editor(s): Faundez, Julio; Tan, Celine

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781848441132

Section: Chapter 7

Section Title: Taxing Constraints on Developing Countries and the Global Economic Recession

Author(s): Salter, David

Number of pages: 20

Extract:

7. Taxing constraints on developing
countries and the global economic
recession
David Salter*

1. INTRODUCTION

Taxation and the corresponding raising of tax revenue are central to a
country's culture, legal system and ultimate development. The correla-
tion between taxation and development is imprecise not least because of
the other tangible and intangible factors that impact upon development.
However, tax revenues feed development and without economic growth
linked to development tax revenues are circumscribed. In the absence of a
worldwide unitary tax system, taxation and the raising of tax revenues lie
primarily within the province of individual countries.
Consequently, taxation has the potential to empower a country to
allocate resources and to adopt policies, determined by economic and
political considerations, as to its wealth and its distribution. In developed
countries, the presence of strong governance systems ensures that this
potential can normally be realised and hence the control of taxation and
for that matter borrowing remains in central government. This cannot
be said of developing countries. In this chapter, an examination is under-
taken of the ways in which such fiscal autonomy or sovereignty has been
fettered or constrained in developing countries whose tax systems and
other governance systems are at an earlier stage of development than
their counterparts in developed countries. This encompasses an initial
consideration of in-built domestic constraints, followed by an analysis of
inter-country constraints (regional trade/tax agreements, multilateral and
bilateral double taxation agreements, and tax competition) and interna-
tional institutional constraints arising out ...