On June 5, 2021, Finance Ministers from the Group of Seven major industrialized nations committed to a global minimum corporate tax rate on multinationals of at least 15 percent. While there are a number of details yet to be hammered out in broader global discussions, this historic agreement heralds an important step forward on the road to international corporate tax reform. […]
The COVID-19 shocks are proving to be especially challenging for fragile states. Pre-COVID, fiscal revenues were low in such countries and governments were struggling to raise them. Now, COVID-19 is hitting them hard and fiscal revenues are falling. Once the pandemic abates, restoring and further enhancing tax collection is even more important to secure debt sustainability, facilitate the post-COVID-19 recovery, and meet development financing needs in order to meet the Sustainable Development Goals. This is a formidable challenge. However, our new staff research finds that achieving sizable gains in tax collection in fragile environments is not “mission impossible.”
As our chart shows, four fragile states (Liberia, Malawi, Nepal, and Solomon Islands) achieved sizable increases in tax revenues over a decade—by between 7 and 20 percentage points of GDP. Most of these countries had introduced tax reforms when their tax revenues were far below the average for fragile states, but each went on to exceed the average, with Nepal and Solomon Islands doing so by a wide margin.
These experiences emphasize the importance of sustained tax reform efforts. In these cases, tax reforms were pursued over extended […]
April 22, 2018
The IMF Executive Board has just endorsed a new framework for stepping up engagement on governance and corruption in our member countries. Let me talk about why this is important and what it means for our work.
July 21, 2017
After two decades of steady growth, Uganda’s economy has slowed, and life for Ugandans is not improving fast enough.
Drought in the Horn of Africa, regional conflict, and slow credit growth have contributed to this decline, with per capita growth falling to ½ percent from an average of 5 percent for the past 20 years. […]
July 11, 2017
Economists tend to agree on the importance of competition for a sound market economy. So, what’s the problem when it comes to governments competing to attract investors through the tax treatment they provide? The trouble is that by competing with one another and eroding each other’s revenues, countries end up having to rely on other—typically more distortive—sources of financing or reduce much-needed public spending, or both. […]
Many advanced countries need structural reforms to make their economies more productive and raise long-term living standards. Our new research shows that provided countries can afford it, fiscal policy, through spending or tax incentives, can help governments overcome some obstacles to the reforms, particularly in the early stages. […]