ABSTRACT
This chapter discusses the use of taxation for attaining policy objectives. During the last centuries, taxation has been used by governments for pursuing various policy objectives. Nowadays, the use of taxation especially serves policy aims such as redistributing income, stimulating economic growth and stability, promoting economic development and correcting behaviour. To only a partial extent are tax systems designed in order to raise public revenue while keeping the distortion of taxation on the economy at a minimum. Often, tax systems are also designed to serve the purpose of correcting the distribution of income in a population. A feature of the tax system that seems to have important repercussions on economic growth is the incidence of taxes on labour, or 'tax wedge'. Public financial management, and especially public sector revenue, has long been considered to play an important role in economic development. One main area of taxation where developing countries lack capacity is the agriculture sector.
