Tax Policies for Sustainable Development: Researchers’ Findings Presented at the Annual Conference of the Global Development Network

The annual conference of the Global Development Network (GDN) was organized in Clermont-Ferrand, France, from Nov. 2 to 4, 2022. Several academics across various disciplines attended the conference. Director General Makino Koji and Research Fellows Suzuki Tomoyoshi and Asada Ray of the JICA Ogata Sadako Research Institute for Peace and Development (the JICA Ogata Research Institute) participated in the conference.

GDN is a network of policy think tanks, research institutions, and researchers in developing and developed countries that seeks to facilitate knowledge exchange on development. This year’s conference discussed the role of tax systems in optimizing resource allocation, mitigating aftershocks, and redressing inequality through redistribution.

At the session titled “Resource Mobilization: Tax Revenues and Their Effective Use in Developing Countries,” which was moderated by Makino and hosted by the JICA Ogata Research Institute on Nov. 2, 2022, experts discussed how the effective use of tax revenues can contribute to sustainable urban and rural development.

During his presentation, Suzuki reported the results of his research on the spillover effects of urban transportation infrastructure. He said that finance is the greatest challenge faced by developing countries when they undertake urban transportation projects. To resolve this gap, he proposed a financial scheme that has indirect economic spillover effects on the areas surrounding such transportation infrastructure projects. The effects include an increase in real estate prices in nearby areas and an increase in tax revenues from fixed assets. He identified certain initiatives that are key to ensuring the sustainability of such a scheme, for example, enhancing the maturity of property tax systems, coordinating schemes between taxation and transportation authorities, and designing property tax systems that promote equity in urban areas.

Erik Vergel-Tovar, assistant professor at the University of Los Andes, Colombia, presented a study on spillover effects in the city of Medellin (please check the “Spillover Effects on Urban Transformation” video). This study examined the effects of the accessibility benefit of mass transit investments on cadastral values over time. The study was previously presented at the Transportation Research Board (TRB) annual meeting in January 2022. He discussed the literature review conducted for the study and then explained the research methods. He used experimental and control groups of land parcels to examine the impact of Metro Line A (including the BRT line), the recently opened LRT of the Ayacucho Project, and the oldest cable car line in the city. He compared the premiums on land parcels in the control area with the premiums in areas served by the metro line, the LRT system, and the cable car. He discussed policy implications regarding the potential utility of property tax systems in generating revenue for mass transit projects via accessibility benefits generated by this type of infrastructure.

Finally, Asada discussed how Sri Lanka could sustain its rural population while experiencing economic growth. She introduced a case study on government subsidies that have contributed to sustainable rural development in Sri Lanka. She explained three key factors that influenced rural sustainability: development ideology, welfare policies, and positive perceptions toward rural areas.

A lively discussion followed, starting with comments by Ada Jansen, professor at Stellenbosch University, and Hiroshi Sato, chief senior researcher at the Japan External Trade Organization’s Institute of Developing Economies.