Raising Revenue Right: A Roadmap for Domestic Resource Mobilization

Raising revenue right is a defining challenge for emerging market and developing economies. Tax systems must do three things well: mobilize sufficient revenue to finance public goods and social protection, limit efficiency distortions, and ensure that the tax-and-transfer system is fair.

This report presents an integrated framework to help policy makers identify the best balance between efficiency and fairness for raising a given amount of revenue—referred to in this book as the fiscal frontier—and the paths countries can take to reach it. The analysis draws on a growing body of public finance research and country case studies, many supported by the World Bank and grounded in administrative data.

To help countries apply this framework, Raising Revenue Right: A Roadmap for Domestic Resource Mobilization first assesses the state of revenue mobilization today. It then examines how countries can harness the 3Ts—technology, transparency, and trust—which can help move countries toward the fiscal frontier and, in some cases, push the frontier outward. Digital tools, better use of data, cross-border information sharing, and stronger trust between citizens and the state can improve tax administration and compliance, opening new possibilities for raising revenue. Next, it provides a toolkit covering three areas: using taxes as instruments of environmental and industrial policy; applying the Marginal Value of Public Funds framework to assess whether and how to raise additional revenue; and using administrative tax data to generate policy insights. The final chapter provides policy makers with practical guidance on implementing the report’s key lessons.