Ernesto Crivelli, Ruud A. de Mooij, J. E. J. De Vrijer, Mr. Shafik Hebous, and Mr. Alexander D Klemm
This paper aims to contribute to the European policy debate on corporate income tax reform in three ways. First, it takes a step back to review the performance of the CIT in Europe over the past several decades and the important role played by MNEs in European economies. Second, it analyses corporate tax spillovers in Europe with a focus on the channels and magnitudes of both profit shifting and CIT competition. Third, the paper examines the progress made in European CIT coordination and discusses reforms to strengthen the harmonization of corporate tax policies, in order to effectively reduce both tax competition and profit shifting.
Against a backdrop of the dismantling of apartheid and the current government's commitment to negotiating a new constitution based on universal suffrage and protected human rights, discussions are under way on the appropriate economic policies to be pursued in the new political climate. This paper focuses on the redistributive and growth policies needed in the new South Africa.
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The paper identifies France’s structural reforms that would yield the largest competitiveness gains based on macro-empirical evidence, and reviews signs of potential gains from a deregulation of the services sector. It is expected that completing deregulation in the services sector would benefit the entire French economy, by boosting productivity and exports. Econometric results have estimated the impact of reducing the labor taxation and labor market rigidities and of increasing innovation to the average level of other advanced countries.
This study focuses primarily on the redistributive and growth policies that will be needed in a new South Africa, on the budget options available to effect such policies, and on the opportunities for outward-looking policies in the external sector that would result from the eventual elimination of trade and financial sanctions. The remainder of this introductory chapter provides a brief overview of the ensuing chapters and indicates the main conclusions that are to be drawn.
Poverty can be placed in context most easily by focusing on the bipolar nature of the South African economy—a bipolarity that was maintained until recently by the legal regime of apartheid. It manifests itself in a basic split between the high living standard enjoyed overwhelmingly by the white minority and the condition of poverty in which the majority of the black population lives. Aggregate social and economic indicators clearly underline these differences. Although, based on GNP per capita and the structure of production, South Africa is considered to be an upper-middle-income country, the benefits deriving from the economy accrue disproportionately to the white minority.1 The income levels of the black population and the social indicators pertaining to this sector of the community—such as life expectancy at birth and infant mortality—are comparable to those of the poorer countries that border South Africa.
Since the early 1970s, and more especially since the mid-1980s, the labor market distortions and rigidities that were an inherent part of the apartheid system have gradually eased. Over the same period, the share of nonwhite labor income in total GDP has increased significantly, from 26 percent in 1970 to 34 percent in 1989. This chapter provides an empirical analysis of the changing nonwhite labor income share and addresses the effects of the diminishing discrimination in labor markets.12
The IMF, an international organization of currently 185 member countries, was established in 1946 to promote international monetary cooperation, exchange stability, and orderly exchange arrangements; to provide temporary financial assistance to countries with balance of payments difficulties; and to foster sustainable economic growth. To achieve these objectives, the IMF carries out three types of operational activities: surveillance, financial assistance, and technical assistance.
This paper focuses on the corporate income tax (CIT) regime that features a high statutory rate but low revenue productivity, as well as a bias toward debt financing, ineffective size-dependent regimes, and inefficient tax incentives. Profit-insensitive taxes are comparatively high. Anti-tax-avoidance rules are strong, but risks to outbound profit shifting remain. Tax uncertainty is another concern. At the individual level, the system of taxing wealth and capital income is complex, with distortions from differential taxation across savings instruments. To address some of these issues and make the tax system more supportive of growth and job creation, the government plans to reduce the CIT rate, further cut the labor tax wedge, unify taxes on capital income, and narrow the wealth tax. Staff’s analysis suggests that complementing these reforms with measures to remove inefficient tax incentives, further reduce the debt bias, address disincentives to company growth, and streamline the taxation of long-term savings could enhance their impact on competitiveness, revenues, and growth.