Oil-to-Cash Won't Work Here!

Center for Global Development: Oil-to-Cash is a proposal for governments facing a resource windfall to consider transferring some or all of the new income directly to citizens in a universal, transparent, and regular dividend. Having put this money in the hands of its citizens, the state would treat it like normal income and tax it accordingly—forcing the state to collect taxes, fostering citizen oversight, and building accountability in the management of resource revenues and the delivery of public services.

In discussions about Oil-to-Cash, policymakers and other interested parties frequently express a similar set of doubts and criticism. The criticism tends to focus on claims of better uses for the money, unforeseen consequences of a dividend, or some unique logistical or political barrier in a particular country.

This paper lists—and attempts to address—the most serious objections to this idea. The response to many objections is to ask about a plausible counterfactual (how do cash transfers compare to the alternative policy options?). Others warrant a clearer articulation of available evidence or ways to mitigate real worries through smart program design.