The recent World Bank / ODI Global / IFS Public Finance Conference in London was a powerful convergence of minds, bringing together researchers, policymakers, and practitioners from over 15 countries to dissect the future of fiscal policy in low- and middle-income countries.

I was honored to attend and contribute, presenting my research on tax compliance in Pakistan. Across two intense days, the discussions confirmed a crucial lesson: effective public finance is about far more than just economic theory, it’s about understanding complex human and institutional behavior.

Day 1: The Tug-of-War between Policy Design and Reality

Day one set the stage by immediately challenging conventional wisdom in Tax Administration and Informality.

• Uganda’s Experience: Research showed that tax audits can have substantial and negative real economic impacts on firms, while new cargo scanning technology had limited effect on border compliance. As noted by the Ministry of Finance, such tools aren’t silver bullets—they require a comprehensive set of complementary policies.
• The Informality Trap: We saw that policies can backfire; a ban on cash payments to workers in Uruguay led formal firms to simply become informal themselves. Conversely, simple, high-touch interventions like official visits were found to be effective in encouraging formal worker registration.
• Keynote by Sir Tim Besley: Sir Tim provided a timely overview of the field’s evolution, reminding us that the nuances of organizational, legal, and political contexts, the very things that were lost in the technocratic thinking of the 80s and 90s, are now, fortunately, being rediscovered as central to revenue mobilization.

The afternoon sessions focused on Progressivity, Redistribution, and Accountability. Studies on Brazil and the DRC showed that increasing the progressivity of property taxation can boost overall tax revenue. Crucially, the evidence also highlighted the persistent challenge of political economy: research showed that campaign donors are more likely to win public procurement contracts, though a simple warning of scrutiny could deter this behavior.

Day 2: The Power of Data, Transfers, and Global Cooperation

Day two revealed the immense power of high-quality data to inform policy at scale.

• Social Protection Success: Presentations on Brazil’s Bolsa Família program demonstrated its significant success in promoting human capital accumulation and intergenerational social mobility, showing how well-designed transfers can profoundly impact labor supply and earnings for the poorest households.
• International Tax Evasion: The growing complexity of the global economy demands global solutions. Research on the post-BEPS landscape showed slight increases in effective tax rates for multinationals in profit centers.
• Keynote by Annette Alstadsæter: Professor Alstadsæter’s keynote, drawing from the Atlas of the Offshore World, underscored the importance of collaborative research between academics and journalists to generate new evidence on hidden wealth, encouraging researchers to embrace novel data to improve the foundations of empirical work.

The day concluded with sessions on Service Delivery and Tax Compliance. My own presentation on a tax audit program in Pakistan revealed a crucial behavioral response: firms reduced their tax liability declarations post-audit. This suggests that they had learned about the tax auditors’ limited detection and enforcement capacity, highlighting a significant gap in state capacity that must be addressed for compliance to be sustainable. We also saw positive examples, such as how a minor coding change on India’s VAT platform dramatically cut down on fraudulent excess credit claims.

My Key Takeaways: What This Means for Public Finance

If there is one thing I inferred from the breadth of the proceedings, it is that effective public finance policy today must be an exercise in adaptive management:

1. Behavioral responses to policy are often unexpected. Policies designed for one outcome can easily backfire or have unintended consequences.
2. Novel data sources are revolutionizing our field. From customs transactions to leaked bank records, new data is providing unprecedented insight into economic behavior and policy impacts.
3. Institutions and context matter immensely. The effectiveness of a policy is not just about its design but how it fits within the existing political and institutional landscape.
4. Effective policy requires a blend of technology and human interaction. Digital platforms are crucial, but personal engagement, like targeted audits or official visits, remains vital for compliance and service delivery.

I enjoyed every opportunity to discuss these challenges and future research directions with fellow enthusiasts.

As Sir Tim Besley beautifully noted:

It is a privilege to be in such company, a collection of people all interested in the same things and a true set of common spirits.