For decades, economists have sought to understand why developing countries collect so little tax revenue. Tax-to-GDP ratios in low-income countries typically hover around 10 to 15 percent, while wealthy economies routinely collect 30 to 40 percent.
The predominant explanation has emphasized “information trails“—third-party reporting from banks, employers, and other firms that make income visible to tax authorities. Under this view, tax capacity grows alongside structural economic transformations, such as the shift from self-employment to formal wage work and the expansion of the banking sector, suggesting that low-income countries have few short-term policy levers to increase revenue.
Πηγή: American Economic Association, Research Highlights