Designing tax systems in Developing Countries - An evaluation of the Dominican tax system
(2011) NEKM01 20111Department of Economics
- Abstract
- The Dominican Republic is a small open economy, highly dependent on trade for its economic growth. During the past decades, the country has taken major steps to liberalize its trade regimes. As a consequence revenues from import duties and tariffs have fallen sharply. This has put an immediate pressure on the country to reform its tax system in order to increase revenue from domestic sources to cover up for the loss in trade taxes. The purpose of this study is to evaluate the Dominican tax reforms and current tax structure against four criteria’s; revenue effects, economic efficiency, equity and administrative simplicity. The study also aims at identifying ways to further improve the tax system in the Dominican Republic. The study shows... (More)
- The Dominican Republic is a small open economy, highly dependent on trade for its economic growth. During the past decades, the country has taken major steps to liberalize its trade regimes. As a consequence revenues from import duties and tariffs have fallen sharply. This has put an immediate pressure on the country to reform its tax system in order to increase revenue from domestic sources to cover up for the loss in trade taxes. The purpose of this study is to evaluate the Dominican tax reforms and current tax structure against four criteria’s; revenue effects, economic efficiency, equity and administrative simplicity. The study also aims at identifying ways to further improve the tax system in the Dominican Republic. The study shows that the Dominican Republic has been successful in shifting the tax system from relying on trade to instead derive income from domestic sources. This has been possible mainly through a simplified tax design and a broadened tax base both for income taxes and consumption taxes. Improvements made in terms of economic efficiency, equity as well as administrative simplicity have be found. The study concludes that the generous tax incentives given to foreign firm’s represents lots of forgone tax revenue and that they might not be motivated from a cost benefit perspective. By limiting the tax incentives, the Dominican Republic could improve the revenue generating capacity of its tax system and secure future growth in tax revenues. Further the study concludes that widespread corruption in public institutions hampers the possibilities to generate higher revenue levels. (Less)
Please use this url to cite or link to this publication:
http://lup.lub.lu.se/student-papers/record/1897668
- author
- Bergman, Elin LU
- supervisor
-
- Åsa Hansson LU
- organization
- course
- NEKM01 20111
- year
- 2011
- type
- H1 - Master's Degree (One Year)
- subject
- keywords
- Tax reform, The Dominican Republic, Taxation and development, Tax design
- language
- English
- id
- 1897668
- date added to LUP
- 2011-05-20 15:42:49
- date last changed
- 2011-05-20 15:42:49
@misc{1897668,
abstract = {{The Dominican Republic is a small open economy, highly dependent on trade for its economic growth. During the past decades, the country has taken major steps to liberalize its trade regimes. As a consequence revenues from import duties and tariffs have fallen sharply. This has put an immediate pressure on the country to reform its tax system in order to increase revenue from domestic sources to cover up for the loss in trade taxes. The purpose of this study is to evaluate the Dominican tax reforms and current tax structure against four criteria’s; revenue effects, economic efficiency, equity and administrative simplicity. The study also aims at identifying ways to further improve the tax system in the Dominican Republic. The study shows that the Dominican Republic has been successful in shifting the tax system from relying on trade to instead derive income from domestic sources. This has been possible mainly through a simplified tax design and a broadened tax base both for income taxes and consumption taxes. Improvements made in terms of economic efficiency, equity as well as administrative simplicity have be found. The study concludes that the generous tax incentives given to foreign firm’s represents lots of forgone tax revenue and that they might not be motivated from a cost benefit perspective. By limiting the tax incentives, the Dominican Republic could improve the revenue generating capacity of its tax system and secure future growth in tax revenues. Further the study concludes that widespread corruption in public institutions hampers the possibilities to generate higher revenue levels.}},
author = {{Bergman, Elin}},
language = {{eng}},
note = {{Student Paper}},
title = {{Designing tax systems in Developing Countries - An evaluation of the Dominican tax system}},
year = {{2011}},
}