On Tuesday, March 29th, USAID’s Office of Health Systems (OHS) and the Health Finance and Governance (HFG) project held an hour-long technical briefing session on a new study, Tax Reform and Resource Mobilization for Health. The study examines whether improvements in tax revenue performance due to tax administration reform actually result in more government funds for the health sector, and discusses conditions that facilitate greater allocations toward health spending. The report shows many countries are still far from reaching their tax capacity, but if countries’ tax effort rose to the average rate, then government health expenditures could increase by an additional $2-$8 per capita. The analysis of 188 countries over 18 years (1995 – 2012) found that increased tax revenues do not necessarily translate to increased health spending. This study identifies four factors that favor the allocation of additional tax revenue toward the health sector. Accompanying the report are two country case studies on El Salvador and Rwanda, where successful tax administration reforms, combined with other measures, significantly increased allocations to health.
Marty Makinen (HFG/R4D), Yoriko Nakamura (HFG/R4D)