World Video | Defence | Foreign Affairs | Natural Events | Trade | NZ in World News | NZ National News Video | NZ Regional News | Search

 

Tax Reforms to Improve Economic Performance

Tax reforms to improve economic performance

Many governments are facing historic high levels of deficit and debt. Public spending has risen and they are taking in less money as tax revenues fall - more than 10% in some countries.

Governments are attempting to consolidate their budgets, looking for the appropriate balance between expenditure cuts and revenue increases. The OECD's "Tax Policy Reform and Fiscal Consolidation" says that for tax regimes to support sustainable economic growth, governments must decide the right way to raise additional tax revenues.

Taxes can be a disincentive to work, invest and innovate, with adverse effects on economic growth and welfare. But these such distortions can be minimised: * Change the overall tax structure to raise more revenue from taxes on consumption and residential property tax and less from personal and corporate income taxes; * Broaden tax bases to enable rates to be kept as low as possible; * A "green" tax system, crucial to a Green Growth strategy, will achieve environmental objectives and the additional revenues raised may facilitate wider growth-oriented tax reforms; * Ensuring that all citizens pay their fair share of taxes contributes to fiscal consolidation. OECD initiatives to counter offshore non-compliance are yielding billions of euros in extra tax revenues.

These arguments are further explored in two Tax Policy Studies.

Tax Policy Study No. 19 details the rationale for tax breaks, asks whether they are still justified, and cites case studies such as VAT reduced rates and tax reliefs for house buyers. It notes that "tax expenditures" are often entrenched in tax regimes and urges countries to evaluate whether they are worthwhile.

Tax Policy Study No. 20 recommends ways to make taxes less distortive and more growth-friendly. It also looks at the "political economy" of tax reform - why governments are able to design, legislate and implement growth-oriented tax reforms in some circumstances and not others and how to overcome obstacles.

Tax reforms will only work if taxpayers agree they are fair. For example, reforms that recycle some of the additional revenues to poorer households can be helpful. Governments must consider the distributional impact of the whole tax reform package - balancing the impact on taxpayers against future growth prospects and ensuring that all taxpayers continue to pay their fair share.

More information about these publications, including executive summaries, is available at www.oecd.org/ctp. The OECD will release new data on tax revenues and tax-to-GDP ratios on Wednesday 15 December in the 2010 edition of the annual "Revenue Statistics".

ENDS

© Scoop Media

 
 
 
World Headlines

 

UN: Decades Of Health Gains At Risk In Brazil Due To COVID-19

Although COVID-19 cases are declining in Brazil, the pandemic is putting decades of public health gains there at risk, the head of the World Health Organization ( WHO ) said on Friday. With global attention and support focused this week ... More>>

UN Report: Myanmar Approaching Point Of Economic Collapse

The turmoil following the military coup in Myanmar, coupled with the impact of COVID-19 could result in up to 25 million people – nearly half of the country’s population, living in poverty by early next year, a United Nations report said on Friday. That ... More>>

World Vision: India’s Second Wave Shows The Global Fight Against COVID-19 Is Far From Won

As India’s COVID-19 daily infection rates reach devastating levels, international aid agency World Vision has warned that the world is nowhere near defeating this virus and some nations are yet to face their worst days. Andrew Morley, World Vision ... More>>

Focus On: UN SDGs

Study: Cut Methane Emissions To Avert Global Temperature Rise

6 May 2021 Methane emissions caused by human activity can be reduced by up to 45 per cent this decade, thus helping to keep global temperature rise to 1.5 degrees Celsius in line with the Paris Agreement on climate change, according to a UN-backed ... More>>

UN: Learning From COVID-19, Forum To Highlight Critical Role Of Science, Technology And Innovation In Global Challenges

New York, 4 May —To build on the bold innovations in science, technology and innovations that produced life-saving solutions during the COVID-19 pandemic, the UN will bring together experts to highlight measures that can broaden the development and deployment ... More>>

What COVID-19 Has Taught Us: “Healthcare Can No Longer Exist Without Technology”

A grandmother in a village in the Gambia should have the same quality of life and access to healthcare they deserve as in New York or London. Photo: InnovaRx Global Health Start-up Works To Bridge Healthcare Gap In The Gambia By: Pavithra Rao As ... More>>