TAXDEV will work with the governments of Ethiopia and Ghana to produce modelling tools and to analyse tax and benefit policies and administration. TAXDEV researchers have already worked with civil servants and other stakeholders in these countries and will be travelling to Ethiopia and Ghana in the next few months to develop their initial project ideas. The projects are anticipated to begin by the summer, the IFS said.
The centre will also do more general research into taxation in developing countries, looking at what makes good tax policy as a country develops, and how that affects households, businesses, the economy, and the government's ability to raise revenues, the IFS said.
This research will build on analysis of the situations in Ethiopia and Ghana, the institute said.
TAXDEV will be funded by a 26 month grant from the Department for International Development (DfID).
IFS director Paul Johnson, who will be chair of TAXDEV said: "Designing effective tax policy requires good empirical evidence on the effects of different policy options on people and businesses. This evidence is too often lacking in developing countries. [TAXDEV] is designed to help address this, and to help build the capacity of the governments of Ethiopia and Ghana to undertake their own research and analysis of the key tax policy issues they face."
Tax expert Heather Self of Pinsent Masons, the law firm behind Out-Law.com said: "The IFS is a very highly-respected body, providing independent research and comment on a wide range of issues. It is excellent news that they have now received funding to support the development of administrative capacity in developing countries."