Tax reforms as a vehicle toward sustainable development

Sustainable development can be defined as the practice of reserving resources for future generation without any harm to the nature and other components of it. Sustainable development ties together concern for the carrying capacity of natural system with the social, political, and economic challenges faced by humanity. The philosophy of tax reform has undergone significant changes over the years in keeping with the changing perception of the role of the state. With the change in the development strategy in favour of market determined resource allocation, the traditional approach of raising revenues to finance a large public sector without much regard to economic effects has been given up. The recent approaches to reform lay emphasis on minimizing distortions in tax policy to keep the economy competitive. This paper provides an inside to theoretical reasoning for the links between sustainable development and taxation reforms and to evaluate the development in taxation system to promote sustainable development. Taxation offers an antidote to developing countries’ dependence on external concessional finance and provides the fiscal reliance and sustainability needed to promote growth (OECD, 2008b).