Taxes are a constant part of life for every company and a constant element of economics, finance, and financial law. Any changes observed in the science and theory also apply to the importance and position of taxes in the practice of corporate finance, public finance, and economic growth. Beside this, a new meaning of taxes in the economies of countries in the world and the European Union is introduced. Taxes will always introduce risks and uncertainties in business, due to the high volatility and uncertainty of tax law. Moreover, being a category that affects the economic growth, they cause disturbances in stability and welfare of the state. Therefore, while considering the essence of taxes in a country, one should not consider this category in isolation from corporate finance and social welfare. Two things are certain in the world: death and taxes.

In this paper we provide short- and long-run tax buoyancy estimates for 107 countries (distributed between advanced, emerging and low-income) for the period 1980–2014. By means of Fully-Modified OLS and (Pooled) Mean Group estimators, we find that: i) for advanced economies both long-run and short-run buoyancies are not different from one; ii) long run tax buoyancy exceeds one in the case of CIT for advanced economies, PIT and SSC in emerging markets, and TGS for low income countries, iii) in advanced countries (emerging market economies) CIT (CIT and TGS) buoyancy is larger during contractions than during times of economic expansions; iv) both trade openness and human capital increase buoyancy while inflation and output volatility decrease it.

This Selected Issues paper offers policy recommendations for Senegal to reach high and sustained growth with the goal of exiting low-income country status. For Senegal to reach Plan Sénégal Emergent (PSE) objectives, reforms under the PSE need to create space for small and medium-sized enterprises and foreign direct investment to thrive. Reform of Senegal’s business environment needs to be accelerated. Macrostructural reforms should be stepped up in the energy sector, in which Senegal still ranks 170th in the world. Progress in the electricity sector can be achieved by continuing to improve reliability of supply and reduce electricity costs. Reform of the taxation system, by simplifying procedures and optimizing the tax rates, is another macro-critical area in which Senegal needs to make significant strides.