In this paper we review the structure of tax systems in Latin America and analyze their impact on the real economy-- economic growth, macro-economic stability, income redistribution and foreign direct investment--, and on the extent of informality –the size of the shadow economy—and ‘tax...

The main focus of this paper is on the potential role that taxation and public expenditure policies play in general in affecting income distribution. We find that progressive personal income taxes and corporate income taxes reduce income inequality. The effect of corporate income taxes seems to...

One of the oldest questions in the theory and practice of taxation is that of the appropriate mix of direct and indirect taxes. The choice between direct and indirect taxes has contributed to a long animated debate, in political and academic circles, regarding the virtues and defects of those...

The choice of the direct-indirect tax mix also is likely to have, as we review below, important consequences in other dimensions of the economy including macroeconomic stability, disparities in income distribution, and foreign direct investment flows. All those, including economic growth, will...

This study develops a dynamic general equilibrium model, applied to Pakistani data, in which optimizing agents evade taxes by operating in the underground economy. The cost to firms of evading taxes is that they find themselves subject to credit rationing from banks. Our model simulations show...

The goal in this paper is to build on the existing literature to better explain the tax assignment choices made by countries in different economic circumstances. In particular, we explain why tax assignment to subnational governments is five times greater in industrial than developing countries,...

The purpose of this paper is to evaluate the current practice of local government taxation in Pakistan and to point the way toward structural reforms that are both more rational and more in step with Pakistan’s vision for its fiscal decentralization. The analysis here is restricted to sub...