Fiscal space for domestic funding of health and other social services

March 2017
Filip Meheus, Di McIntyre

To progress toward universal health coverage and promote inclusive social and economic development, it will be necessary to strengthen domestic resource mobilisation for health.

What are the options for increasing domestic government revenue in low- and middle-income countries? This paper analyses the relationship between level of economic development and levels of government revenue and expenditure showing 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
  • maximising revenue from mineral and other natural resources
  • 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.

Financing Fiscal space South Africa