Revenue Composition and Growth
Revenue Composition and Growth
strategy.19 While foreign aid can make an important contribution,
the main source of finance for a country’s public expenditure must be its
own tax revenue. This requires an effective tax administration and a tax
policy that minimizes distortions to ensure that the best use is made of resources
across the economy. To minimize distortions, tax systems should
avoid excessive complexity, focusing on taxing a broad range of goods and
services at relatively uniform rates. Income taxation also has a role to play,
although weak administrative capacity limits revenue from this source in
many developing countries. Tax systems should also be sensitive to the
possibility of market failure, not least in relation to the use of the environment
and natural resources, and be administered in a manner that is
transparent, impartial, and rules-based.
The tax system also needs to be accepted by domestic constituencies as
equitable, although experience has shown that taxation is generally less effective
than well-targeted spending programs in pursuing pro-poor policies.
The wealthy have proved adept in avoiding high tax rates on their income
by, for instance, locating assets abroad or taking advantage of relatively favorable
treatment of capital gains. Taxes on consumption and trade, which
are particularly important in many developing countries, are also blunt instruments
for pursuing equity objectives. For example, exempting some
basic foodstuffs from the value-added tax (VAT) certainly conveys some
benefit to the poor, since they are likely to spend a larger fraction of their
income on food. However, the rich may well spend a larger absolute
amount on the exempted good, so they derive the largest benefit. Removing
the exemption would yield revenue that could be spent in a more propoor
way,21 along the lines discussed in the section on “Fiscal Policy,
Human Development, and the MDGs.”
Improving the efficiency and equity of tax systems is a critical component
of IMF-supported programs. Almost three-fourths of PRGF-supported
programs in low-income countries incorporate measures to broaden the tax
base and improve horizontal equity (treating taxpayers with similar incomes
equally) by, for example, removing exemptions and abolishing special
tax breaks for foreign investors. Many programs also seek to improve
tax efficiency by lowering or reducing the number of import tariff rates,
simplifying the structure of the personal income tax, or improving tax administration.
Similarly, some programs seek to improve equity by, for example,
increasing the progressivity of the personal income tax.22 The IMF
also continues to play a key role in the adoption and improvement of the
VAT, which has proved to be a key tax innovation for many developing
countries. By introducing modern methods of self-assessment, the VAT is
also seen as an important first step toward modernizing tax administration.
Fiscal Dimensions of Sustainable Development
Prepared for
World Summit on Sustainable Development
Johannesburg, August 26–September 4, 2002
Revenue Composition and Growth - To learn more about this author, visit International Monetary Fund's Website.
Like this article? Share it with your friends
An efficient and fair tax system is an important component of a progrowth
strategy.19 While foreign aid can make an important contribution,
the main source of finance for a country’s public expenditure must be its
own tax revenue. This requires an effective tax administration and a tax
policy that minimizes distortions to ensure that the best use is made of resources
across the economy. To minimize distortions, tax systems should
avoid excessive complexity, focusing on taxing a broad range of goods and
services at relatively uniform rates. Income taxation also has a role to play,
although weak administrative capacity limits revenue from this source in
many developing countries. Tax systems should also be sensitive to the
possibility of market failure, not least in relation to the use of the environment
and natural resources, and be administered in a manner that is
transparent, impartial, and rules-based.
The tax system also needs to be accepted by domestic constituencies as
equitable, although experience has shown that taxation is generally less effective
than well-targeted spending programs in pursuing pro-poor policies.
The wealthy have proved adept in avoiding high tax rates on their income
by, for instance, locating assets abroad or taking advantage of relatively favorable
treatment of capital gains. Taxes on consumption and trade, which
are particularly important in many developing countries, are also blunt instruments
for pursuing equity objectives. For example, exempting some
basic foodstuffs from the value-added tax (VAT) certainly conveys some
benefit to the poor, since they are likely to spend a larger fraction of their
income on food. However, the rich may well spend a larger absolute
amount on the exempted good, so they derive the largest benefit. Removing
the exemption would yield revenue that could be spent in a more propoor
way,21 along the lines discussed in the section on “Fiscal Policy,
Human Development, and the MDGs.”
Improving the efficiency and equity of tax systems is a critical component
of IMF-supported programs. Almost three-fourths of PRGF-supported
programs in low-income countries incorporate measures to broaden the tax
base and improve horizontal equity (treating taxpayers with similar incomes
equally) by, for example, removing exemptions and abolishing special
tax breaks for foreign investors. Many programs also seek to improve
tax efficiency by lowering or reducing the number of import tariff rates,
simplifying the structure of the personal income tax, or improving tax administration.
Similarly, some programs seek to improve equity by, for example,
increasing the progressivity of the personal income tax.22 The IMF
also continues to play a key role in the adoption and improvement of the
VAT, which has proved to be a key tax innovation for many developing
countries. By introducing modern methods of self-assessment, the VAT is
also seen as an important first step toward modernizing tax administration.
Fiscal Dimensions of Sustainable Development
Prepared for
World Summit on Sustainable Development
Johannesburg, August 26–September 4, 2002
Revenue Composition and Growth - To learn more about this author, visit International Monetary Fund's Website.
Like this article? Share it with your friends
 | |
 |
No article feedback found. |
| |
Leave Your Feedback |
 | |
| |||
George LudwigGeorge Ludwig is a recognized authority on sales strategy and peak performance psychology. An international speaker, trainer, and corporate consultant, he helps clients like Johnson & Johnson, Abbott Laboratories, Northwestern Mutual, CIGNA, and numerous others improve sales force effectiveness and performance. Though it's George's strategies and processes that help corporations increase productivity and performance, it's his tremendous energy and dynamism that spark the transformation. Again and again, clients remark on his amazing ability to unleash human capacity and inspire men and women to break out of their comfort zones. The result is a whole new type of salesperson. His customized presentations teach achievers to make stunning advances in their lives. From helping salespeople realize cherished dreams to helping corporations exponentially accelerate revenue streams, George Ludwig leaves audiences and individuals empowered, emboldened, and clamoring for more. George is the best-selling author of Power Selling: Seven Strategies for Cracking the Sales Code and Wise Moves: 60 Quick Tips to Improve Your Position in Life & Business. - Visit George Ludwig's Website |
|||
Jeff FosterWebBizIdeas.com is a Minneapolis website design company founded to help people start an internet business by providing them with website, business, and internet resources that help foster the growth of successful online businesses and develop innovative Internet business ideas. We specialize in internet consulting & internet marketing. - Visit Jeff Foster's Website |
|||
|
To learn more about the Evan Elite Author Program please contact us. | |||
 | |
|  |
Subscribe to International's articles
 | |
|
|  |
 | |
|
| |
 | ||
 |
||
 |
||
 |
||
|
| ||
 |
| Have you written articles that would be of value to entrepreneurs? Become an expert on our site by publishing them! Expose yourself to a wide audience, drive more traffic to your website and get more sales! Click Here for details. |
|
|
 |
| Modeling the Masters: Learn the true secrets behind Walt Disney's business success factors & grow your company! Video produced by Phanta Media |
|
|
 |
"Learn straight from Evan how you can Make a Full Time Income (And More) from a Website"
Click Here To Learn More |
|
|
|
|
Get advice & tips from famous business owners, new articles by entrepreneur experts, my latest website updates, & special sneak peaks at what's to come!
|
|
 |
 Instant Direct Mail Make $ From Your Invention Dismiss a Franchise Memorandum Template 2 Your Life Your Legacy |
|
 | ||
 |
Top 50 SEO Posts - 2008
Top SEO Posts of the Year | |
 |
More PR Resources
Press Release Builder | |
| ||
 | ||||
| ||||
|
| ||||
| ||||
|
|
|
|
|
||||||||||||
|
Email us your ideas on how to make our website more valuable! Thank you Sharon from Toronto Salsa Lessons / Classes for your suggestions to make the newsletter look like the website and profile younger entrepreneurs like Jennifer Lopez and Sean Combs!
|
|
|
| ||||||||||||
| ||||||||||||
|
|
||||||||||||