The Impact of Macroeconomic Policies on the Level of Taxation (and on the Fiscal Balance) in Developing Countries

28 Pages Posted: 15 Feb 2006

See all articles by Vito Tanzi

Vito Tanzi

International Monetary Fund (IMF); National Bureau of Economic Research (NBER)

Date Written: October 24, 1988

Abstract

In recent years the level of taxation of many developing countries has changed dramatically over relatively short periods. These changes are too large and too sudden to attribute fully to a deterioration in tax administration or to changes in the traditional determinants of tax levels. The paper argues that they should be attributed mostly to macroeconomic policies. The paper discusses the connection between tax levels and (a) the real value of the official exchange rate, (b) import substitution policies, (c) trade liberalization, (d) inflation, (e) public debt, (f) financial policies. The paper concludes that more attention should be paid to those relationships and that tax reform should aim at neutralizing some of these effects.

JEL Classification: 121, 320, 431

Suggested Citation

Tanzi, Vito, The Impact of Macroeconomic Policies on the Level of Taxation (and on the Fiscal Balance) in Developing Countries (October 24, 1988). IMF Working Paper No. 88/95, Available at SSRN: https://ssrn.com/abstract=885070

Vito Tanzi (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street NW
Tax Policy Division Fiscal Affairs Department
Washington, DC 20431
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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