Tariff structuring in water and sanitation: public profiting arrangements on universalization initiatives

Abstract

Abstract Water and sanitation service access is a global problem, impacting disproportionally poor communities of low-income countries. Failed universalization initiatives highlighted historical negligence, social inequality, and bad governance. Infrastructure developments require large investments, which most local governments cannot afford. Alternative funding might come from private investors through cost-effective project finance arrangements. Public services should be sustainable, conciliating users' willingness to pay with providers' willingness to supply. Governments have implemented profit-driven strategies over taxing outsourced public services to increase budget inflow. Inefficient tax schemes on essential public services have damaged universalization initiatives in developing countries. These negative taxing practices have damaged tariff structure, service sustainability, and project attractiveness. The public sector should not profit from unsustainable outsourced services that are required but they cannot supply. Water and sanitation expansions on low-income communities in developing countries should not take place as tariff-free schemes, but within a tax-exempt policy.