Chapter 4 | Page 145 introducing single-rate flat taxes.17 These changes have made the collection of taxes more efficient, although the results have been mixed.18 Corporate tax is another important tool that can be better utilised by developing States. Despite the potential of corporate taxes as a source of public sector revenue,19 many developing countries perform poorly in collecting adequate revenue from corporate taxes.20 The power and influence of corporations, various forms of corporate tax incentives and institutional weaknesses in enforcing tax compliance are the likely causes. It is argued that the use of tax incentives for domestic and multinational corporations as a policy measure to attract investment has the effect of reducing overall tax revenue as a percentage of economic production,21 with very little real effect in increasing the overall level of investment. Therefore it is an unnecessary loss of revenue. Yet many countries are reluctant to reform or increase tax rates to avoid losing investment.22 A common justification for reducing corporate tax rates is that it stimulates the economy and leads to further investment, but many reject this proposition, arguing that the evidence does not support it and that such tax cuts do not produce the expected benefits.23 At the same time, the increasing scope and complexity of 17 An analysis of the pros and cons of a flat tax system is given by The Economist, Simplifying tax systems: The case for flat taxes The Economist <http://www.economist.com/node/3860731>. 18 Deborah Itriago, Owning Development: Taxation to fight poverty (Oxfam, London, 2011), 24; Michael Busler, 'Income tax policy: is a single rate tax optimum for long-term economic growth?' (2013) 9(4) World Journal of Entrepreneurship, Management and Sustainable Development 246-254. 19 International Monetary Fund, above n 14. 20 See for example, Giulia Mascagni, Mick Moore and Rhiannon Mccluskey, Tax Revenue Mobilistation in Developing Countries: Issues and Challenges (European Parliament, 2014), <http://www.europarl.europa.eu/RegData/etudes/etudes/join/2014/433849/EXPODEVE_ET%282014%29433849_EN.pdf>. 21 Enrique Delamonica and Santosh Mehrotra, 'How Can the Financing of Social Services Be Made Pro-Poor?' in Katja Hujo and Shea McClanahan (eds), Financing Social Policy: Mobilizing Resources for Social Development (Palgrave Macmillan, London, 2009) 89, 101. 22 Ibid. 23 Institute on Taxation and Economic Policy, '"High Rate" Income Tax States Are Outperforming No-Tax States: Don't be fooled by Junk Economics' (Policy Brief, ITEP), <http://www.itep.org/pdf/junkeconomics.pdf>; Ignacio Saiz, 'Resourcing Rights: Combating Tax Injustice from a Human Rights Perspective' in Aoife Nolan, Rory O'Connell and Colin