Developed countries have high tax-to-GDP ratios because their tax collection policies work in a context of good information and enforcement. Developing countries such as Pakistan have tried this approach as well, but tax revenues are still inadequate because information and enforcement are weak. A report from the International Growth Centre argues that the "third-best" approach - creating innovative policies to derive greater revenue in a climate of poor information and enforcement - may be the best option for the developing world despite being inefficient for developed countries.
Read the policy brief here.
Watch the video here.
