Fiscal space for domestic funding of health and other social services

Abstract

To progress toward universal health coverage and promote inclusive social and economic development, it will be necessary to strengthen domestic resource mobilization for health. In this paper, we examine options for increasing domestic government revenue in low- and middle-income countries. We analyze the relationship between level of economic development and levels of government revenue and expenditure, and show that a country's level of economic development does not predetermine its spending levels. Government revenue can be increased through improved tax compliance and efficiency in revenue collection, maximizing revenue from mineral and other natural resources, and increasing tax rates where appropriate. The emphasis should be on increasing revenue through the most progressive means possible; the purpose of raising government spending on health would be defeated if that spending were funded by increasing the relative tax burden of those who are meant to benefit. Increasing government revenue through taxation or other sources is first and foremost a fiscal policy choice or political decision and should be supported through concerted global action.