Conventional wisdom has it that the value-added tax is not a suitable instrument for lower-level jurisdictions (‘provinces’) in a federal system. The problems that arise when it is so used have become a serious constraint on the development of the VAT—and closer economic integration—in...

In 2005, the German government announced a far-reaching fiscal adjustment program. This paper uses the IMF’s Global Fiscal Model to study its impact and explores options for addressing long-term pressures from population aging. The growth effects of the planned VAT increase are likely modest,...

This paper provides an overview of the key economic factors that shape tax policy reform in many high-income countries, developing countries, and/or transition economies. The paper describes and evaluates global and regional developments with respect to tax rates and revenue ratios over the last...

Tax reform in Latin America during the 1980s emphasized broad-based, low-rate consumption taxes over steeply progressive income and property taxes, primarily to simplify the tax structure and facilitate tax administration. While tax reform need not necessarily raise tax-to-GDP ratios, countries...

During the 1970s and 1980s, many developing countries enacted value-added taxes (VATs) as a part of their fiscal structures. The productivity of this source of revenue has depended in large part on the facility with which the tax can be administered. Single rate VATs have proved easier to...

This paper addresses two fundamental issues in indirect tax design. It first revisits the case for reduced rates on items especially important to the poor, establishing conditions under which even very crudely targeted spending measures better serve their interests. It then explores the welfare...

Issues of taxation and development, which have long been a central concern of the IMF, have attracted wider and renewed interest in the last few years. This paper reflects on three broad lessons of experience: that developing countries differ vastly in tax matters, and in ways that are less than...

This paper reviews the experiences of a few countries in Sub-Saharan Africa that have succeeded in attracting fairly large amounts of foreign investment. The review indicates that sustained efforts to promote political and macroeconomic stability and implement essential structural reforms have...

What determines the ability of governments from developing countries to access international credit markets? We examine this question using detailed data on sovereign bond issuances and public syndicated bank loans since 1982. We find that traditional measures of a country’s links with the...

Between 1991 and 1999, capital flows to 25 transition economies in Europe and the former Soviet Union differed widely in terms of overall levels and the share and composition of private flows. With some exceptions (notably Russia), the main form of private inflows was foreign direct investment....