Dominican Republic Gearing Up for a More Efficient Tax System : An Assessment of Tax Efficiency, a Cost-Benefit Analysis of Tax Expenditures, and an Exploration of Labor Informality and its Tax Implications
This study discusses options how to increase the Dominican Republic tax revenue and attempts to identify priority areas for efficiency-enhancing reforms. A 2016 World Bank report on Dominican fiscal policy found that the country's tax expendit...
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| Language: | English |
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World Bank, Washington, DC
2018
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| Online Access: | http://documents.worldbank.org/curated/en/903761518538205568/Gearing-up-for-a-more-efficient-tax-system-an-assessment-of-tax-efficiency-a-cost-benefit-analysis-of-tax-expenditures-and-an-exploration-of-labor-informality-and-its-tax-implications http://hdl.handle.net/10986/29394 |
| Summary: | This study discusses options how to
increase the Dominican Republic tax revenue and attempts to
identify priority areas for efficiency-enhancing reforms. A
2016 World Bank report on Dominican fiscal policy found that
the country's tax expenditures were poorly targeted and
regressively distributed, benefitting the wealthy more than
the poor, and imposed considerable fiscal and economic
costs. The report also showed that the tax contribution of
the informal sector is extremely low, despite the fact that
informal workers account for roughly half of the active
labor force. As the new government prepares the ‘fiscal
pact' first described in the country's development
strategy 2030, policymakers will require a more thorough
understanding of these issues and their fiscal, economic,
and distributional implications. Thus, building on past
analytical work, the present study focuses on two priority
areas: tax efficiency and labor informality. Chapter One
reveals that the DR's strong and sustained economic
growth in recent years has had only a modest impact on
revenues' efficiency from value-added tax, corporate
income tax, personal income tax, and minor taxes. An
analysis of tax-collection efficiency reveals several
feasible options for boosting tax revenues. Chapter Two
explores the characteristics, correlates, and effects of
widespread labor informality in the DR. Identifying the
correlates of informality yield important implications for
promoting formalization and thereby broadening the
income-tax base. |
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