Tax policy plays a major role in shaping development outcomes. While tax is not an end in itself, the role played by a suitably designed mix of tax policies in securing sustainable public finances, promoting equitable growth, dampening harmful social and ecological outcomes, and building democratic states, is well established (Kaldor 1980; Brautigam, Feldstad, and Moore 2008). However, the research that has been conducted on how tax policies shapes development outcomes often lacks sufficient detail on specific country cases (Bird 2010). Almost invariably, tax revenue provides the cheapest means of funding public investments in education, health, physical infrastructure, crime prevention, and public defense. Tax is also core to the social contract between citizens and state: citizens as taxpayers want assurance that everyone pays their fair share and that the revenue collected is being spent wisely on their behalf. Citizens are far more likely to pay taxes when they feel that politicians are honoring the social contract and that tax policies are legitimate and applied fairly.
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