Proper Taxation Policy for Enhanced Competitiveness: The Case of a Micro Economy

Abstract:     
This paper evaluates Turkish Cypriot taxation policies and structure using a comprehensive approach, with a view to identifying problems and recommending changes to the tax structure that will improve the competitiveness of the economy. The analysis both at the macro as well as micro level proves that there is a need for fundamental changes to the system. The primary data gathered by both households and businesses surveys about taxation clearly indicate that the perception of tax payers call for reforms in both taxation policies and as well as tax administration. Based on the findings from the analysis and keeping the principles identified in the literature review, the study puts forward set of policy measures that can be practically implemented and that will increase the certainty and simplicity of the system for businesses. This paper also argues that proposed tax policy reforms will lead to significant improvement in growth, productivity and overall competitiveness of the economy.

Keywords: taxation, productivity, competitiveness

JEL Classification: H21 H30

working papers series