While there is an obvious need to consider the potential costs and benefits of tax incentives and tax havens, a deeper understanding of the domestic context in which policies are made and enforced is of equal interest.

In the case of tax incentives, understanding local political dynamics driving the introduction and management of these incentives is critical to any effort to improve outcomes.  This means exploring the political activities of relevant businesses, the interests of political leaders and politics at the level of the agencies that grant incentives and exemptions.  As important as understanding why such policies persist is understanding how they might change, and what factors have led certain countries to introduce more effective tax expenditure monitoring and to reform existing policies.  To date very little is known in detail about these questions.  Finally, there is also potentially interesting research to be conducted about regional coordination efforts aimed at minimizing tax competition.

With respect to tax havens there appear to be interlinked questions about bureaucratic capacity and political will.  There remain doubts in many quarters about whether developing countries have the necessary capacity to enforce highly complex rules around transfer pricing, thin capitalization and other issues.  Better understanding the realities of tax administration in these areas and the prospects, and limits, of capacity building thus remains a priority in understanding options moving forward.   Similarly, there is scope for additional research on the political barriers to more effective efforts to combat international forms of tax evasion by both firms and individuals, given the political influence of those involved.  Indeed, recent evidence of developing countries exploring the potential for setting up new offshore banking facilities (i.e. Ghana see Prichard 2009) is indicative of the complex politics at play within these countries, and demands further attention.


See Prichard, W. (2009). Taxation and Development in Ghana: Finance, Equity and Accountability. London, Tax Justice Network.

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