Today is the first full day of the AALS Annual Meeting in San Francisco. The Section on Taxation is hosting a program from 2:00 p.m. – 5:00 p.m. on Taxation in Developing Countries:

• Reuven S. Avi-Yonah (Michigan) (Moderator)
• Kimberley R. Brooks (McGill)
• Karen B. Brown (George Washington)
• Victoria Perry (International Monetary Fund)
• Russell Powell (Seattle)
• Eric M. Zolt (UCLA)

While developing countries are presumed to share the goals of revenue collection, income redistribution and economic regulation that drive taxation in developed countries, the structure of taxation in developing countries tends to be radically different from that of developed countries. About two-thirds of the tax revenue in developed countries is obtained from direct taxes, mostly personal income tax and social security contributions. The remaining one-third comes primarily from domestic sales tax. The situation is exactly reversed in developing countries: about two-thirds of the tax revenue comes from indirect taxes, mostly VAT, sales tax, excises and taxes on trade. The remaining one-third consists largely of corporate income tax.

This panel will discuss whether these structural differences are optimal and, if not, what can be done to improve taxation in developing countries. In particular, the panel will discuss whether the conventional view that the role of direct taxation in developing countries must be more limited is correct given recent developed/developing country cooperation initiatives, and whether there are other forms of taxation (such as the Islamic zaqat) that could play a greater role in developing countries.