 We should say that the work on the GRD continues a tradition at wider of work on data. We host, as you know, the World Income and Equality Database, which has been running now for nearly 20 years and is one of the best sources of data, consistent data across countries on income and equality. So by partnering with the ICTD, we're kind of continuing this tradition of trying to offer, as it were, public goods in data. And indeed, to flag up for you, we're also working on a social protection database as well. So we're moving ahead on these areas and, as Carl mentioned, we'll be putting up interactive tools over the course of the next year so that particular policy makers could play with these data sets and benchmark themselves further, which I think is extremely valuable. Okay, so in the remaining time in this session, I thought what I'd do is run through some ideas around taxation and development, partly picking up on work that's been done earlier, both at wider and elsewhere, partly picking up on some of the themes that we're seeing across this conference over the last two days. So that's what I'm gonna do now. And part of the motivation is really is policy, getting the answers to the questions in most needs from research. McKean in his very good opening plenary talk distinguished between, as it were, first order policy problems or solutions and second order ones. There are some really big questions, as we'll see out there, that we don't seem to have much evidence or at least the evidence that I've come across. And this doesn't just apply to the area of tax policy, it applies to a lot of economic policy areas, I think, and it's part of the general debate that we've been having at wider on big questions in development economics versus small questions in development economics. One of the takeaways I want to give you from this presentation is tax policy is obviously about revenue mobilization, but it isn't only about revenue mobilization. Tax policy has a very important role in shaping economies and indeed whole societies for good or bad ways. We hope for good ways, achieving inclusive development, but tax policy, as we know, can also impede inclusive development. So that'll be one of the takeaways from this presentation. Okay, so I think we'll all agree that tax policy is at the top of the policy agenda. I mean, there are other things at the top of the policy agenda, but certainly tax policy is way up there. When I compare my professional experience starting out in the 1980s, working on structural adjustment programs in Africa, very much the focus was on the public spending side. It was also to agree on the tax side, but it was fairly kind of rudimentary. We've come a long way over the years, partly because we're much more concerned these days about the quality of states, state effectiveness. State effectiveness needs financing, but also states need to collect revenues in ways that are fair and just and transparent. So the state agenda runs across all of our present concerns. And there's been a lot of talk, as you know, about the so-called citizen state contract in democracies, underpinning new democracies. As I mentioned, the role of tax policy, particularly now in the context of the very ambitious sustainable development goals, the need to diversify resource revenues, sorry, to diversify away from reliance just on resource revenues, which are vulnerable to price slumps. For example, the downturn in the oil price for oil producers since 2012. Aid fatigue, donors have pushed due because the rise in foreign aid over the last two decades has really started to stall out. And so we have a debate, which is very welcome. It's not just between technocrats, like many of the people here, working economists, either in government or researchers, but it now involves parliamentarians, civil society, and a much wider range of stakeholders. And that's really all for the good. And secondly, we have a lot more action on tax reforming. Some people say, well, you know, things don't improve in policy. Well, actually they have in tax policy. We've seen a lot of progress. We've seen a move to VAT systems in most countries, rise in tax GDP ratios in many countries, and we've seen better institutions and better compliance, not in every country, but we're seeing some solid progress, and including in some of the countries that we would have thought 20 years ago, whew, this is gonna be very difficult, say like Uganda, you know? But we have many concerns. The tax bases are still too narrow. We still have this continuing resource revenue dependence that I've referred to, and in some ways that's actually been magnified by the commodity supercycle that's been going on the last decade or so, the rise of China, China's demand for metals and oil, particularly from Africa. It's made some policy makers a little bit. I was gonna use the word lazy, that would be unfair, but somewhat negligent in looking for other sources of revenue. Classic would be, of course, Nigeria, which Kyle showed in the data set earlier. We still have weak compliance, although we've got improved compliance, and other issues have come up, particularly international tax evasion and avoidance, because in part, more countries are accepting and attracting foreign direct investment. So in some ways are increasing concern for issues around international tax and evasion and avoidance, particularly involving international companies, for example, in the extractive sector, is driven by greater foreign investment in low-income and middle-income Africa and elsewhere. But those are big issues involving profit shifting, use of tax havens and so forth. Risks and shocks, which I wanna talk a little bit more about later, I don't think there's enough attention paid to the vulnerability of tax bases to a whole range of shocks, climate change particularly, but also pandemics, like the Ebola experience that we had two years ago, conflict, fragility, and so forth, yeah. Opportunities and challenges, we're getting many opportunities and challenges as low-income countries move to mixed status, low-income countries like Ghana, Kenya, Uganda, Tanzania, and so forth. We get a process of formalization as countries move to mixed status. With formalization, you generally get better chances of compliance because you get creation of formal financial records by formal sector companies, much easier to monitor transactions and so forth. And of course with the rise of more diversified economies as you move into MIC status, you've got potential for more revenues from financial services, the whole digital economy becomes more important to you. And you get a process of structural transformation and social change, which is then leading to creation of potential new revenue sources, but also new issues in actual taxation that policy makers need to be aware of. For example, taxation in the financial sector and how that operates. And there are large numbers of research issues around that, which I think are very exciting, including the digital economy, which we've barely begun to scratch. But if you look at countries like Indonesia, for example, the rise of the economy and so forth, or India indeed, is really quite startling and needs to be explored from a tax perspective. I constantly say the politics is as important as the economics, not because I'm here to please the political scientists, but because I think that it's really central, political economy as it's conceived in the classical sense. Economists have a vision of tax policy which comes from the optimum tax literature, very well-developed microeconomics of taxation. But we know that in most countries, or indeed all countries, tax policies are an outcome of many different agents interacting. Those agents have varying degrees of power, states, citizens, businesses, communities, international organizations. I think this means much more research at a country level through country case studies, as well as the interesting cross-section work that's now being done. Tax incidents is often sort of discussed in a vacuum still, away from net fiscal incidents. In other words, setting the incidents of taxes by group, by location, by space, by gender. We really need to set that against the incidents of public spending. So we get an overall picture of where the fiscal system is going. And we need that for several reasons, one of which is that an unfair burden of taxation, in other words, I get taxed and most of the benefit goes to you. If I'm a poor person, that's exceptionally unfair. That characterizes the system of many countries. It's one reason why compliance has been sometimes stalling out. It can be a source of social conflict. It has a spatial dimension. Often, remoto-rural regions are disadvantaged in terms of taxation and not receiving much in terms of public spending. But it's extraordinarily data demanding. If you go to the website of Wyde, you'll see some very interesting work by Nora Lustig, for example, on net fiscal incidents. And so underlying all of this, we obviously need a very good database of information and it's not just tax information. We need very good household surveys and enterprise surveys because for households, we cannot explore the incidence of taxes without very good data, including hopefully panel household data, which is still too rare. And increasingly, we need good quality enterprise survey data, small, medium and large enterprise survey data to explore the impact of the taxation in either incentivizing or disincentivizing and private investment. Now, one thing I wanted to flag up is the metric of the tax GDP ratio. You know, it's obviously one of our key sort of flag points and obviously it's very dominant in the way we use the GRD data set. There are all kinds of problems here. I don't need to dwell upon about both the measurement of taxation, Kyla's obviously gone through those, but also actually about the measurement of GDP. And the measurement of GDP is not just a problem in fragile states. It's a problem in some quite large states as well. I mean, for example, there's a very large controversy about the correct measurement of India's GDP, for example, at the moment. But it's certainly an issue in the low income countries. I worked on Mozambique in the early 90s at the end of the Civil War. I was coming in at the end of the Civil War working with the Ministry of Finance. And we were looking at the budget, the classic fiscal deficit as a ratio of GDP. Three variables, government spending, taxation and GDP. And we had enormous levels of inaccuracy on all three and correspondingly a very high level of uncertainty about what the true fiscal deficit was. And this was a country, obviously, that was coming out of Civil War. GDP had not been properly measured for years. There were two million refugees flowing around. So the data issues for the fragile states and the fiscal area are very big. But GDP itself is not an incontestable number. Is tax to GDP the best indicator we have? We keep reverting back to it. Governments like rules of thumb, but it's important to think about how the tax-GDP ratio is raised. I mean, for example, if you jack up the tax-GDP ratio through a lot of distorting taxes, including distorting taxes that hit the poor, that's not a very satisfactory outcome. So we need other metrics about our progress. I was particularly struck by Mick Keen's discussion of the policy gap versus compliance gap. That seems a great way to go forward, including decomposing the policy gap across taxes. But it's also we need to kind of develop metrics and measures whereby we have some evidence about whether revenue is really doing its development job. It would be great to see a sort of, even a crude set of metrics around is the revenue we're raising through the higher tax-GDP ratio really doing what we see in terms of achievements in human development infrastructure, shaping the economy in ways that create jobs, particularly for poor people. In other words, Mick had this idea of the policy gap and the compliance gap. In some ways, there might also be a kind of broader inclusive development gap, yeah? Okay, we're doing well with raising the revenue or not raising the revenue, but actually, are we getting the bang for the buck that we want in terms of underlying inclusive development? And it'd be interesting actually to think about what might be some kind of measures for that and also potential benchmarking across countries. So I throw that idea out for discussion. So what should tax policy try to achieve? Well, as I said, public economics makes some very strong statements about what constitutes an optimal tax system, but as we know, tax authorities in developing countries face much higher institutional and informational barriers in high-income countries, classically the informal sector. So what is optimal in low-income and middle-income countries may differ quite a bit from what is optimal in high-income countries, and the large theoretical literature on this, the creation of ideas around second-best tax policy, for example, associated with Chris Heady or indeed third-best tax policy introduced by Henry Claven. And as I said, the tax system that we actually see in operation is often the outcome of an historical path dependence, including inertia, negotiation among powerful stakeholders, which usually leads to very large exemptions. So for example, Latin America's tax system still has very large exemptions around income tax, which some have linked back to colonial land inequality of the 19th century. So a sense of persistence through time of exemptions and patterns of taxation that favor one group over another. And these are very difficult things to shift, and they're very far away from the ideals of public economics. Now, modern public economics, to its credit, recognizes this and emphasizes incentives and constraints in building fiscal capacity. I think here of the work by Tim Besley and Torsten Thurston. But it really does need a lot of work at the country level to think about, and country case goes, think about the sort of fiscal history of nations and the ways in which they've evolved. I think that could be a very fruitful line of research. And that includes the centrality of compliance, the work of Joel Slemrod, resonating with the political science, work on fiscal contracts by Mick Moore and others in the international sense of tax and development. Now, one thing, the final point here, is that macroeconomic crises often push tax reform. The government is in a fiscal crisis. It tries to shake down whatever revenue sources it can find. It's the very worst time to do tax reform, but of course it's probably one of the times when the government is least resistant to do it because it has to do it. So my work on Africa in the 1980s, as one went into one country after another was undergoing structural adjustment, you would see desperate attempts to raise revenue from existing distorting taxes. Quite often the revenue was raised, but not in ways that were great for long-term sustainable growth and some of those distortions still kick around the system today. Nigeria and Gola are now in the position where they've budgeted for oil at $70 a barrel, oil is at $45 a barrel, oil is not going above $100 a barrel again. They're desperately seeking around for more diversified revenue, but this is the wrong point to start doing it. It's way too late. I'd just like to make the observation that, I said at the start that financing has driven much of the debate. If you think about, you know, obviously as we've gone through development over the last 70 years, since the end of the Second World War creation of the UN, the independence of new states, the objectives of development have really broadened out. We see that particularly accelerating in the last 15 years with the movement from economic growth as the pure objective to the MDGs to the SDGs. So the questions like, for example, the gender dimensions of tax systems should never have been thought about even perhaps a decade ago and now very much on the policy gender and need really good analysis of data, gender disaggregated data to analyze them. The financing goal drives the debate. So you think about the financing for development conference in Addis Ababa and there's a powerful set of interests that really keeps it focused on the pure financing aim of the tax system to somewhat of the neglect of the impact of the tax system on private sector investment and job creation. So in some ways there's a very powerful set of interests that keeps the financing goal as it were at the top of what policy makers think about when they think about taxation, right? So obviously states need revenue and we know that and states need to be built so we're not complaining about that. Donors want to exit from aid. Silver society and particularly the international NGOs are concerned about the imbalance of power between multinationals and states. They're also concerned about funding public goods and human development for poor communities. So they want to see the maximum amount of revenue raised as well. So you see this underpinning particularly in the UN system, the debate around the role of taxation and revenue raising in the development process. Very much let's get that tax GDP ratio up and therefore let's focus on the reform of tax administrations, increase compliance particularly by large actors such as multinationals and that's all great but what it tends to do is to take attention away from how the tax policy that you have shapes your economy, whether that tax policy is encouraging say small enterprise development, whether that's encouraging creation of jobs particularly for younger people, whether that's attracting foreign direct investment or disincentivizing foreign direct investment and so on. So the kind of discourse that we have around financing for development of the role of taxation in financing development, it very much came out of the human development focus of the MDGs. I mean the MDGs were about education, health, sanitation, et cetera, right? Provision of public goods through government or through local government, particularly for poor people that need a lot of money and a chunk of that money, a large chunk of that money has to come from domestic resource mobilization, yeah? And that's great, I'm a big fan of the MDGs and I'm obviously a big fan of the SDGs but the SDGs are now taking us towards things other than human development, they're talking towards, as I've said, better livelihoods, more job creation, in other words, structures of economy that really work for poor people that may be reducing equality over time. And that's where you really need the analysis, obviously, of public economics because you're now moving into territory where you have to understand the impact of tax policy on enterprise behavior and employment generation, on foreign investment and so forth. And you really need to think about tax policy not just as financing a given budget to then spend on education and health, you need to think about tax policy and its role in shaping economies and societies. And that may be, for example, the use of tax policy for industrial policy. John Page is gonna talk in the plenary about the role of industrial policy later on. Using tax incentives or tax exemptions to encourage the diversification economies, the creation of new sectors. It has some fans but you have to watch the exemptions. If you look at Africa, for example, Tanzania is a classic case of this. They have many exemptions in their tax system which created many years ago with the purpose of creating a wider industrial base which should become quite dysfunctional over time. Quite often what you might be thinking about is removing distortions in the tax system which are discouraging private investment particularly by small enterprises which are imposing high compliance costs on tax, on enterprises and therefore in a sense, a discouraging job creation. And there's a big role obviously for research in that area. Big role for research on environmental sustainability. Not only the reduction of environmental bads like air pollution, water control. This has become obviously a big issue in China but also the classic which is climate change, mitigation and adaption and the movement of the global economy towards carbon taxes and other mechanisms for reducing emissions. Again, a big, big, among a set of issues where research has a dramatic role to play, an important role to play. So there's a lot of ways in which we can use public economics for this new agenda. Technical assistance by donors to improve tax administrations has ramped up over the last decade. That's just great. But as I've said, tax strategy or tax policy is not just about better administration. It's not just about compliance. It's about understanding the impact of the instruments that you're using on the society and the economy that you have particularly in the areas of livelihood creation and job creation by the private sector. And therefore I would humbly suggest that donors expand their support for capacity building and public economics. And in some ways this conference which is supported by Wider's donors is an attempt to do that, a nice vigorous attempt to do that. And I would cite obviously the UNWider South Mod research that's been discussed in other sessions. As a good example of really of what needs to be done in the community now and which needs further donor support. And one thing that I like about South Mod just sort of a brief caveat is the Institute of Fiscal Studies in the UK is kind of the gold standard for the analysis of tax and benefit reform in the UK by government or proposals by the political parties. And if you can kind of create this kind of institutional apparatus to do that sort of analysis right across the developing world, you're really strengthening democracy and governance because parliamentarians, civil society can turn to that analysis and be confident in the kind of analysis being done and confident of the proposals and the reform measures that are going forward. So that's partly why I just think these sort of things are a great thing to do and highly important. So I'm gonna round off now just by saying something about national tax performance. In some ways the time series data that Kyle's presenting and the GRD, it gives us a picture of taxation over time and we want the longest time series possible. But we're now obviously minute by minute moving into the future. I want a fascinating question that I always face is is the development past a guide to the development future? In other words, we tend to think, well, the tax systems of low income countries may evolve in ways that pattern the historical experience of middle income countries or high income countries. But actually, how far is that true? And I think this is a very open research question. I'd just like to briefly highlight four ways which I think it's still an open question, okay? And actually, in some ways I doubt that the next decades will replicate the development past at least as far as tax revenue mobilization goes on policy. And the first is the informal sector. In development economics, and this is what we teach our student, we have a stylized fact that as per capita income rises the informal sector share of economic activity contracts. That's a very strong stylized fact which dominates our profession. But what do we see actually when we go across large parts of the developing world is that as countries move from low income status to middle income status, the informal sector still remains pretty large, particularly in terms of absolute numbers. And sometimes it's not actually falling in terms of actually a share of job creation, okay? And people who work on the informal sector, you know, constantly banging away at me as an economist saying, Tony, you have this stylized fact that the informal sector is gonna diminish over time but actually it's not diminishing in ways that classical development economics would predict. What does this imply for taxation? Well, obviously there's a compliance issue around the informal sector. So some informal sector firms are quite large and they should be registered and they should be formalized. But a lot of the informal sector is self-employed people, highly unlikely to formalize. They sit outside the tax system. Now, what does that mean? Well, if you look at demographic change, this links to demographic change. We think about Africa, it's got a young population, India has a young population. So there is a demographic boom, a demographic situation in these countries which is working in their favor. If you can get young people into productive employment at rising levels of productivity and skill in the formal sector, you'll not only get economic growth but you will also get tax revenues from them. Because they'll pay taxes on their incomes, the corporations that they work for will be paying tax in the form of corporate taxes. So what's happening as employment stagnates, at least formal employment stagnates in many of these economies, is actually young people are flowing into the informal sector. They're basically self-employed. They're not in any tax system. They too need services, they need education and health for their children and sanitation and safe water, but they're not actually contributing to the fiscal system. So eventually, Africa and India will transition into aging populations and that window of opportunity to use these people very productively including contributing to the tax system will have gone away. Or alternatively, some of these people will have migrated to other countries and will contribute to the tax system. Of those countries, maybe remitting back to the home country, maybe not. I think that's a really big issue and it's something that needs to be explored by research. Secondly, there's a digital economy but I don't need to re-emphasize that because time is short and we've already thought about that a little bit. Climate change is the big one but it's not just the impact of climate change physically, it's also the impact of climate change on producers, particularly producers of fossil fuels. In the extractive industries area, which I now work on, there's a very large debate around what we call stranded assets. Basically, fossil fuels, which are out there, for example, some of the gas which is offshore the coast of Africa or coal, which really simply can't be burned if we are to achieve the climate change targets. Companies in the extractive industries area are very concerned about this. So if you look at the oil companies, they're under a great deal of pressure, for example, Exxon, Mobile, BP and so forth, to declare to financial regulators what will be the impact of climate change on the assets they value on their books as companies. What does this imply for revenues? Well, it actually implies that a lot of countries that are sitting on very large reserves of fossil fuels are gonna face a headwind. They're gonna face a headwind of prices as the world moves to renewable technologies, energy technologies, and they're gonna face a sector, the fossil fuel sector, of investors who are gonna drive very hard bargains on tax agreements with countries because for an oil company, there are now multiple sources of oil and gas. And so what you've seen is a real shift of power and bargaining power over to the investor and the exploitation company. So this is gonna change the tax environment for producers in all kinds of ways and actually redoubles the need for extractive resource rich countries to redouble their efforts on developing non-resource sources of revenues. For countries that have resources like metals, like lithium and cobalt, which are incredibly in demand now for use in renewable technologies, energy technologies. I mean, for example, lithium, Zimbabwe now sits on one of the world's largest deposits of lithium. These are gonna be good times ahead and they're gonna drive your revenue base and you're gonna have some favorable tax deals to negotiate with your foreign investors. So we need more research on what this implies longer term for the pattern of revenues going forward. And then finally, there's a whole set of revenue risks that are coming at us that may not make the development future the same as the development past. One is obviously climate change that I mentioned. The other is price shocks, price shocks that are uncertain, we don't know. Nobody really predicted the collapse in the oil price over the last five or six years, including some of the major oil companies. Pandemics, very little research has been done on the impact of pandemics on the tax base. But if you look during the Ebola crisis in Guinea, Sierra Leone and Liberia, the tax base took a tremendous hit. Mining companies shut down, obviously economic activity just contracted, transactions contracted so that affected VAT. We need to know much more about this because of course you have to keep states going and finance while they're coping with pandemics. It's part of the response to the pandemic crisis. Intensifying global competition that can shut down a successful economic sector and a successful source of revenue. The classic here would actually be Nokia in Finland which contributed massively to the Finnish tax base 10, 15 years ago, which is now a much smaller company. The tax policies of developed countries, of rich countries, I mean one thinks here of the Trump border tax, and of course then conflict. And these revenue risks, which we need to explore much more including what are called fat tail events in the options literature are really important if we're gonna build more robust fiscal systems that could cope to shocks. And I think that's been a very underexplored area in the literature. And the second reason it's very important is that actually quite a lot of research shows that aid, foreign aid, is pro-cyclical rather than counter-cyclical. So that quite often when you're in a difficulty or in a crisis, you actually lose some aid rather than gain some aid. So you can get a sort of double whammy. So we need to look at that much more in future. Okay, well the presentation has much more discussion of these, you can sort of see it online. I'd like to make an advert for my project on extractive industries and development, which is up on the wider website. And just thank you all for that. Yeah, great.