Front Matter

Front Matter

Parthasarathi Shome
Published Date:
March 1995
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    © 1995 International Monetary Fund

    Library of Congress Cataloging-in-Publication Data

    Comprehensive tax reform : the Colombian experience / edited by Parthasarathi Shome.

    • p. cm. —(Occasional Papers, ISSN 1251-6365; 123)

    • Includes bibliographical references.

    • ISBN 1‐55775-430‐6

    • 1. Taxation—Colombia. I. Shome, Parthasarathi, 1950–. II. Series: Occasional paper (International Monetary Fund); no. 123.

    HJ2545.C66 1995




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    The following symbols have been used throughout this paper:

    • … to indicate that data are not available;

    • — to indicate that the figure is zero or less than half the final digit shown, or that the item does not exist;

    • – between years or months (e.g., 1991–92 or January-June) to indicate the years or months covered, including the beginning and ending years or months;

    • / between years (e.g., 1991/92) to indicate a crop or fiscal (financial)year.

    “Billion” means a thousand million.

    Minor discrepancies between constituent figures and totals are due to rounding.

    The term “country,” as used in this paper, does not in all cases refer to a territorial entity that is a state as understood by international law and practice; the term also covers some territorial entities that are not states, but for which statistical data are maintained and provided internationally on a separate and independent basis.


    During 1991–94, the Colombian authorities requested the Fund’s Fiscal Affairs Department (FAD) for technical assistance in their ongoing tax reform. In support of their effort, four studies were undertaken in selected areas of tax policy and administration. These efforts were headed by the editor, who is Chief of the Tax Policy Division of FAD. Other participants in the tax policy area included David Dunn, Economist, FAD, as well as members of the FAD panel of fiscal experts: Erik Haindl, Professor, University of Gabriela Mistral, Santiago de Chile; Arnold C. Harberger, Professor, University of California at Los Angeles; and Osvaldo Schenone, Professor, University of San Andres, Buenos Aires.

    The investigations in the above-mentioned tax policy area, conducted in cooperation with the staff of the National Directorate of Taxes and Customs (DIAN), focused on particular areas that the authorities felt needed technical examination and recommendations. The investigations of issues under the value-added tax, income taxes, and customs tariffs thus constituted an examination of the major sources of tax revenue. Given the predominantly technical nature of the analyses and the broad scope of the studies, which touched upon comprehensive tax reform aspects, the authorities encouraged their publication for a wider readership.

    This Fund Occasional Paper should therefore serve the dual purpose of elaborating on the technical intricacies behind the undertaking of tax structure reform and providing a representative example of the variety of studies undertaken by FAD in the provision of technical advice to member countries.

    A number of background points should be underlined in connection with this study. First, in many ways, the various authors made important contributions to all the topics covered. Therefore, the assignment of particular authors to different sections (as noted at the beginning of each section) reflects the principal author who was clearly distinguishable. David Dunn was responsible for the analysis of potential income tax revenue in the section on income tax issues; Erik Haindl for the study in the same section of the impact of the income tax on investment; Arnold C. Harberger for the section on conclusions and future directions for tax reform (while also collaborating on selected aspects of the section on the value-added tax); and Osvaldo Schenone for the section on the customs tariff reform and the analysis of inflation adjustment in the income tax issues section. The editor was responsible for the introduction, as well as the section on value-added tax issues, while holding overall responsibility as team leader.

    Second, the two driving forces behind the endeavor were Mr. Rudolf Hommes, Minister of Finance and Public Credit, who initiated the requests and during whose tenure the visits covering the various topics took place, and Mr. Vito Tanzi, Director, Fiscal Affairs Department, who encouraged and approved their undertaking. Third, the study could not have been completed successfully in the absence of open discussions and full cooperation (including the provision of data) by the staff of the DIAN, in particular, the staff of the Center for Fiscal Studies of the DIAN. Fourth, detailed comments received from the many colleagues who advised the authors on earlier drafts were important in formulating the final version. They include Milka Casanegra-Jantscher, Isaias Coelho, Julio Escolano, Mario Garza, José Gil-Diaz, Jonathan Levin, Claire Liuksila, George Mackenzie, Paulo Neuhaus, Lorenzo Perez, Fred Ribe, and Vito Tanzi. The assistance of Asegedech Woldemariam and Emmanuel Hife in producing Tables 1 and 3738, respectively, is gratefully acknowledged. The editorial assistance of Tom Walter of the External Relations Department was extremely helpful. Of course, the responsibility of remaining errors remains with the various authors.

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