Description
Many lower-income countries are facing sovereign debt crises, and over 3 billion people live in countries whose governments spend more on interest payments than health or education. Large and rapid increases in tax revenues have emerged as the main tool of fiscal consolidation in response to this predicament. Yet there is little evidence for their political viability, nor their wider consequences. How do citizens respond to tax burdens to raise payments for creditors abroad? Do higher debt burdens change the shape of tax politics – for instance, are governments more willing to tax elites, and introduce difficult reforms, or do they encourage short-termism? This paper locates the relationship between tax and debt in current policy discourses and outlines a research agenda that is based in the political economy of the current sovereign debt crisis and the practicalities of tax policy and administration in LMICs.
