Apr 24, 2023

Exploring Domestic Revenue Mobilization for Sustainable Development

We were happy to welcome representatives of tax administrations, ministries of finance, environment, and social affairs, and other institutions responsible for sustainable development to exchange views on practical solutions for improving domestic revenue mobilization. The conference examined the role of domestic revenue mobilization in achieving Sustainable Development Goals (SDGs) and highlighted innovative approaches and best practices successfully implemented in participating countries.

Speakers from the international organization such as International Monetary Fund (IMF), Bank for International Settlements, and Organization for Economic Co-operation and Development (OECD) began discussions by providing an overview of the new developments in international taxation, the impact of high inflation on tax revenues, and the importance of domestic revenue mobilization in achieving the SDGs. Special focus was put also on ways governments can facilitate the green transition. 

“Most countries’ budgets for 2023–24 envisage tighter fiscal policy. However, inflation has boosted tax revenue and has led to a large increase in nominal GDP. This is creating an impression that the fiscal outlook has improved, which might trigger political economy pressures to increase public spending. This would counter the disinflationary efforts pursued by central banks.” said Dubravko Mihaljek from the Bank for International Settlements while discussing the macroeconomic context of the impact of high inflation on tax revenues. In continuation, Joseph Stead from OECD explained in his presentation that taxes and revenues play a vital role in achieving the SDGs. “Taxes and revenues are a source of financing to deliver the necessary public services and are at the same time also a policy tool to address inequality, health, and environmental goals,” noted Mr. Stead and concluded his presentation with an overview of tools that have been developed to support countries in aligning tax policy to the SDGs.

In addition to the overview of the latest international developments in domestic revenue mobilization, specific country cases were presented to outline the lessons learned in boosting revenue in different countries. These cases provided practical examples of successful strategies and policies implemented to increase revenue generation and achieve SDGs.

During the conference, participants learned from the Slovenian case about the role of taxation in supporting the green transition and the potential risks associated with it. By examining the Slovenian case, participants gained a better understanding of how taxation can be a powerful tool in promoting green transition and sustainability. We also looked into the specific case of North Macedonia and the introduction of windfall taxes, explaining the rationale and reasons behind its introduction, the objectives, principles, and key legal solutions under the proposed Law on Solidarity Tax. The expected fiscal effect arising from the proposed legal solution was presented, along with the challenges faced during the process of proposing and adopting the Law by the Government of the Republic of North Macedonia.

The role and development of environmental taxes in the EU countries and recent experience with carbon taxation were also examined. 

The conference took place on April 19-20, 2023 at the CEF in Ljubljana.