Developing countries face tax revenue challenges due to personal income tax
The income tax and VAT are crucial for raising money in most countries. VAT works best when applied simply and evenly. Surprisingly, personal income tax is not as important in developing countries compared to corporate tax. In developed countries, personal income tax brings in more money, but in developing countries, it's the opposite. Personal income tax in developing countries mostly targets labor income, not capital income. This can discourage investment and slow down economic growth.