Achieving the SDGs will depend in part on the availability of fiscal resources to deliver the floors in social protection, social services and infrastructure embedded in the goals. A significant portion of these resources is expected to come from domestic sources. Raising additional revenues domestically, however, may leave a significant portion of the poor with less cash to buy food and other essential goods. Fiscal incidence analysis for twenty-nine low and middle-income countries shows that, while fiscal policy unambiguously reduces income inequality, that is not always true for poverty. In other words, the poor are made poorer by the fiscal system, primarily due to consumption taxes. The Domestic Resource Mobilization agenda could make this situation worse. The demand for additional domestic resources must be balanced against the competing need to protect poor households from becoming poorer as a result of taxes.
Task Force: 2030 Agenda for Sustainable Development