Increasing revenue mobilization is a top priority for North Macedonia. This can be achieved through tax policy reform coupled with enhanced revenue administration, a focus of IMF capacity development. Options include more progressive income taxation, streamlined special regimes, and more and better use of property and environmental taxes. The administrative capacity to enforce taxes can be strengthened through strong reform leadership and governance, IT modernization, a more systematic approach to compliance risk management, and improved tax audit methods.
The IMF’s capacity development (CD) information dissemination policy needs to adapt to a new landscape. The Fund is providing more CD and producing greater and more diverse types of CD-related information. Meanwhile, the external landscape has also evolved, as members, partners, and other CD providers increasingly expect greater transparency and access to information. This paper sets out envisaged reforms to further widen the dissemination and publication of CD information.
It is generally difficult to measure revenue not collected due to noncompliance, but a growing number of countries now regularly produce and publish estimated revenue losses. Good tax gap analysis enables the detection of changes in taxpayer behavior by consistent estimates over time. This Technical Note sets out the theoretical concepts for personal income tax (PIT) gap estimation, the different measurement approaches available, and their implications for the scope and presentation of statistics. The note also focuses on the practical steps for measuring the PIT gap by establishing a random audit program to collect data, and how to scale findings from the sample to the population.
International Monetary Fund. Middle East and Central Asia Dept.
On behalf of the Egyptian authorities, I would like to thank Management and the Board for their support in response to the sudden balance of payment shock under the RFI, and their continued support under this SBA request. We also thank staff for the close engagement during remote missions and the careful deliberations and reports. The authorities are in broad agreement with the assessment of the fallout on the economy from the COVID-19 pandemic and the policy response. I will focus this statement on the policies to mitigate the shock and support economic recovery and key priorities for the medium-term.
International Monetary Fund. Asia and Pacific Dept
This Selected Issues paper provides an overview of the exchange rate and trade dynamics in Indonesia. Using data on monthly export and import price and volume at the sectoral level, the paper estimates pass-through effects of exchange rate changes to trade price and volume. Results indicate adjustment frictions that depend on the source of the exchange rate fluctuation and the degree of integration in global value chains. Overall, combining price and volume effects, we find that 10 percent depreciation in the exchange rate is associated with a rise in the goods net-exports of up to 1.6 percent of GDP. Results indicate that there is considerable asymmetry and sectoral heterogeneity in the pass-throughs of exchange rate on import and export prices. Import prices adjust well to exchange rate fluctuations with the effects being stronger for appreciation episodes. The price sensitivity of export prices to exchange rate shocks is generally lower than of imports and concentrated over shorter horizons and during episodes of depreciation. The price and quantity results imply that exchange rate changes can have significant effects on the current account, by affecting movements in net-exports of goods.
Mr. Santiago Acosta Ormaechea and Atsuyoshi Morozumi
Does the design of a tax matter for growth? Assembling a novel dataset for 30 OECD countries
over the 1970-2016 period, this paper examines whether the value added tax (VAT) may have
different effects on long-run growth depending on whether it is raised through the standard rate
or through C-efficiency (a measure of the departure of the VAT from a perfectly enforced tax
levied at a single rate on all consumption). Our key findings are twofold. First, for a given total
tax revenue, a rise in the VAT, financed by a fall in income taxes, promotes growth only when
the VAT is raised through C-efficiency. Second, for a given VAT revenue, a rise in Cefficiency,
offset by a fall in the standard rate, also promotes growth. The implication is thus
that in OECD countries broadening the VAT base through fewer reduced rates and exemptions
is more conducive to higher long-run growth than a rise in the standard rate.