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Taxes refer to funds originating from domestic taxes that are channelled to the water and sanitation sector via transfers from all levels of government, including national, regional and local ([[#GLAAS|GLAAS]], 2012).
Most lower-income countries do not collect enough tax at decentralised levels of governance to finance infrastructure construction, e.g. [[Capital Expenditure (CapEx)|capital expenditure]] (IRC and WSUP, 2012). Most taxes in lower income countries are collected at national level and distributed to the different regions, according to an allocation formulae. Generally, allocations for water and sanitation are very limited (WHO, 2010).
===Examples===
'''Government expenditure on sanitation and drinking-water'''<br>
Government expenditure from taxes and transfers on sanitation and drinking-water ranged from 0.37% to 3.5% of Gross Domestic Product (GDP) ([[#GLAAS|GLAAS]], 2012, p. 28).
The government of Senegal actively supports the growth of both the water and sanitation sector through government subsidies. Often water infrastructure may exist, but low income households cannot afford the [[Capital Expenditure (CapEx)| capital expenditure]] of connecting their household to the water line. Therefore the government of Senegal has started with ''Social connection''; up to 85% of the cost of a household connection may be subsidized by the state through the social connection program. The Senegalese Government has sustained these programs over several years, leading to the dramatic increase in water coverage, especially in urban areas (Dibner-Dunlap, 2009). For example, 69% of all new household connections to the city water line in the city of Louga, between the years of 2001-2007, were done under the subsidy program. (Dibner-Dunlap, 2009, page 28).
===Key documents===
* Dibner-Dunlap, A., et al, 2009. [http://sipa.columbia.edu/academics/concentrations/epd/documents/WaterAidAmericaFinalReport_2009.pdf A review of local tax policy to expand water and sanitation access: prepared for WaterAid Madagascar and WaterAid America]. New York, NY, USA, School of International and Public Affairs, Columbia University
* Hervé-Bazin, C., 2012. [http://http://celinehervebazin.files.wordpress.com/2012/03/eureau-3ts-short-guide-version-internet.pdf ''3Ts'': Tariffs, Taxes and Transfers in the European water sector: short guide]. Brussels, Belgium: EUREAU
* Winpenny, J., 2011. [http://www.gwptoolbox.org/images/stories/Docs/euwi%20fwg%20primer%20on%20financing%202011.pdf Financing for water and sanitation: a primer for practitioners and students in developing countries]. Stockholm, Sweden: The European Union Water Initiative Finance Working Group, EUWI-FWG.
===Links===
[http://www.irc.nl IRC International Water and Sanitation Centre] is a knowledge broker, innovator and catalyst of change within the water, sanitation and hygiene (WASH) sector working internationally and in selected focus countries and regions. IRC seeks to extend WASH services to the less privileged, while ensuring that services are based on the sustainable use of water resources, are appropriately managed, and are better governed. IRC works in partnership with governments, the public and private sector, Dutch and international organisations, UN institutions, development banks and non-governmental networks and organisations.
<div id="GLAAS">'''GLAAS'''</div>
[http://www.who.int/water_sanitation_health/publications/glaas_report_2012/en/index.html Global Analysis and Assessment of Sanitation and Drinking-Water (GLAAS)] is produced every two years by the World Health Organization (WHO) on behalf of UN-Water. It provides a global update on the policy frameworks, institutional arrangements, human resource base, and international and national finance streams in support of sanitation and drinking-water.
