Broadening the Tax Base: Challenges and Policy Options for Sustainable Revenue Generation

Abstract

Broadening the tax base is a fundamental requirement for improving fiscal sustainability, especially in developing economies facing persistent revenue shortages and rising public expenditure needs. This paper examines the structural, administrative, and political challenges that constrain tax base expansion, including informality, weak governance, narrow tax structures, and widespread tax evasion. It also evaluates key policy options such as tax system digitalization, reduction of exemptions, strengthening tax administration, and improving taxpayer compliance. Drawing on evidence from international organizations and empirical literature, the study finds that effective tax base broadening depends on institutional capacity, trust in government, and simplified tax systems. The paper concludes that sustainable revenue generation requires not only technical reforms but also long-term governance improvements and inclusive fiscal policies