No Representation without Taxation

Less famous than the original slogan, but this one is just as true. Here is a good example:

Low taxes, and the erratic collection of them, are common features of life in most of the Middle East. Among the Arab oil producers, for example, taxation accounted for only 5% of gross domestic product in 2002, rising to 17% in the non-oil countries – which is still very low compared with Germany (39%), Italy (41%) and Britain (37%).

The main reason, of course, is that many of them are rentier economies where the government has sources of income other than taxes. Oil is the classic example but there are others: Egypt benefits in a similar way from the Suez canal and several of the poorer Arab countries receive substantial rent in the form of foreign aid. Overall, slightly less than 20% of Arab governments' revenue comes from taxes.

Taxation is an often-overlooked factor in the internal politics of the Middle East: it helps to explain why undemocratic regimes stay in power for so long. Governments that have substantial non-tax income can buy themselves out of trouble by showering largesse on the population, often keeping prices low through subsidies (as happens in Iran).

The higher the taxes, the more accountability and control the people demand. Perhaps we should make our taxation more obvious.