This paper assesses the evolution of Eastern Caribbean Currency Union (ECCU) real exchange rates over time, and examines whether the region has lost competitiveness. The main finding is that there is little evidence of overvaluation of the Eastern Caribbean (EC) dollar. The relationship summarized above permits the calculation of equilibrium current account balances or norms. The financing of ECCU current account imbalances appears stable. This paper also provides evidence on the distinctive impact that tourism plays in the determination of the real exchange rate in tourism-driven economies.
This Technical Assistance report lists key issues discussed between the IMF’s Fiscal Affairs Department (FAD) and the Davis Tax Committee regarding recommendations for tax reforms in the oil and gas sector in South Africa. It is suggested that the royalty should have a single flat rate, rather than the current variable rate formula. The 5 percent flat rate proposed in the FAD report is modest by international standards. For corporate tax purposes, the current immediate expensing of capital expenditure and the 100 percent and 50 percent uplifts for exploration and development expenditure are overly generous and will lead to both a revenue loss and a long delay before revenue is collected.
International Monetary Fund. Middle East and Central Asia Dept.
This Selected Issues paper discusses measures required to enhance nonhydrocarbon revenue to support fiscal consolidation in Qatar. Qatar depends heavily on the hydrocarbon sector for exports and revenue receipts. The authorities have embarked on fiscal consolidation, underpinned by cuts to current expenditures and enhanced efforts to raise additional revenue. Safeguarding Qatar’s wealth to ensure intergenerational equity and ensure adequate resources for the implementation of the second National Development Strategy would entail increased mobilization of nonhydrocarbon revenue in the near to medium term. Exploring other sources of tax revenue to diversify the government revenue structure and build a stable tax revenue base is also critical.
This Selected Issues paper and Statistical Appendix reviews developments in the structure of the Israeli banking sector, as well as in the key indicators of soundness and profitability in recent years. The paper highlights that Israel’s financial system continues to be dominated by a small number of banking groups. By international standards, the banking system is highly concentrated, with the largest five banking groups controlling almost 95 percent of total assets. The paper also describes developments in exchange restrictions in Israel.
This report provides the analysis of the IMF's projections and estimates on Tunisia's basic data; sectoral distribution of GDP at constant and current prices; supply and use of resources at current and constant prices; consumer price index; balance of payments; selected exchange rate indices; revenue from the petroleum sector during 1995–2000; assets and liabilities of the central bank and deposit money banks; monetary survey; selected interest rates; direction of trade energy production and consumption during 1995–99; summary of the tax system; and so on.
International Monetary Fund. Asia and Pacific Dept
This Selected Issues paper assesses potential spillover effects to the Philippines from US policy shifts and lower growth in China. The US fiscal expansion affects the Philippine economy through the interest rate and the trade channels. The net spillover impact on Philippine GDP is negative in the short term. Compared with the productive case, in which the net output impact is positive, the US nominal policy rate rises by less, but faster normalization of the US term premium leads to higher real interest rates. On the other hand, the gain from trade is smaller owing to the weaker domestic demand expansion in the United States.
This study discusses the Philippine output gap from three perspectives and evaluates the utility of the approaches for policymaking. Incentives in the Philippines appear broadly comparable with those in neighboring countries. The reform would also improve short- and especially medium-term revenue collection. The general tax provisions and investment incentives in seven east-Asian economies are compared. The analysis focuses on stocks of foreign assets and liabilities and adopts a cross-country perspective to help determine the Philippines’ position within a broader universe of emerging market economies.
This paper develops a dynamic general equilibrium model to assess the effects of
temporary business tax cuts. First, the analysis extends the Ricardian equivalence result to
an environment with production and establishes that a temporary tax cut financed by a
future tax-increase has no real effect if the tax is lump-sum and capital markets are
perfect. Second, it shows that in the presence of financing frictions which raise the cost of
investment, the policy temporarily relaxes the financing constraint thereby reducing the
marginal cost of investment. This direct effect implies positive marginal propensities to
invest out of tax cuts. Third, when the tax is distortionary, the expectation of high future
tax rates reduces the expected marginal return on investment mitigating the direct
The structure of Japan's corporate income tax system is broadly in line with those of other G7 countries. However, relatively high marginal and average effective tax rates prompt the question of whether adjustments should be considered to meet the objectives of promoting growth, investment and competitiveness in a revenue neutral manner. This paper discusses key issues and trade-off's related to changes in the corporate income tax system. It does not provide recommendations, but raises issues that could hopefully serve as useful inputs to the ongoing discussion and tax debate in Japan.
This paper examines the intertemporal effect of corporate income taxation on the investment behavior of a firm that faces imperfect capital markets. It shows that when capital markets are imperfect, the optimizing firm goes through different phases of growth. In this dynamic setting, the effect of a corporate tax on profits varies over time. An increase in the corporate profit tax rate initially reduces investment, but the effect is reversed over time as the firm adjusts its financing policy to the new tax rate.