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Tax Policy Reform and Economic Growth
OECD Publishing, November 2010, Pages: 154
This report investigates how tax structures can best be designed to support GDP per capita growth.
PART I. TAXATION AND ECONOMIC GROWTH RECOMMENDATIONS AND REFORMS IN OECD COUNTRIES
Chapter 1. Growth-oriented Tax Policy Reform Recommendations
</STRONG>-1.1. Broad policy options for reforming the overall tax mix
-1.2. Possible avenues for tax reforms to enhance the performance of labour utilisation, investment and productivity
<STRONG>Chapter 2.<EM> </EM>How Do Trends in the Composition of Tax Receipts and in Tax Rates Compare with the “Tax and Growth” Recommendations?
</STRONG>-2.1. The level of taxation
-2.2. The tax mix
<STRONG>PART II. MAKING GROWTH-ORIENTED TAX REFORMS HAPPEN
</STRONG><STRONG>Chapter 3.</STRONG> <STRONG>Obstacles to Fundamental Tax Reforms
</STRONG>-3.1. Obstacles to fundamental tax reforms: issues of tax policy design
-3.2. Tax administration issues
-3.3. Political economy and institutional factors
<STRONG>Chapter 4.</STRONG> <STRONG>Strategies for Successfully Implementing Growth-oriented Tax Reforms
</STRONG>-4.1. A clear strategic vision and solid tax policy analysis
-4.2. Framing tax policy debates when equity issues arise
-4.3. Advancing reform and <I>ex ante </I>constraints
-4.4. <I>Ex post </I>evaluation and international dialogue
-4.5. The proper timing of reform
-4.6. “Bundling” reforms into comprehensive packages
-4.7. Incremental growth-oriented tax reform approaches.
-4.8. Transitional arrangements
-4.9. The quality of the institutions charged with reform design and implementation .
-4.10. Communication and the transparency of tax reform processes
-4.11. Co-ordination of reform across levels of government
-4.12. Strong leadership
<STRONG>PART III. FURTHER ANALYSIS OF THE "TAX AND GROWTH" TAX POLICY RECOMMENDATIONS
</STRONG><I><STRONG>Chapter 5.</STRONG> </I><STRONG>Tax Design Considerations
</STRONG>-5.1. Tax base broadening <I>versus </I>the use of tax expenditures
-5.2. VAT base broadening
-5.3. Recurrent taxes on immovable property
-5.4. Corporate income tax reform strategies
-5.5. Personal income tax reform strategies
<STRONG>Chapter 6.</STRONG> <STRONG>Taxation, Economic Growth and Sustainable Tax Revenues
</STRONG>-6.1. Implemented tax reforms during and after the crisis
-6.2. The tax and growth recommendations are unchanged
Annex A<EM>.</EM> </STRONG><STRONG>The 2010 Tax Reform Process in Denmark
Annex B. The OECD Tax and Growth Study
In the wake of the recent financial and economic crisis, many OECD countries face the challenge of restoring public finances while still supporting growth. This report investigates how tax structures can best be designed to support GDP per capita growth.
The analysis suggests a tax and economic growth ranking order according to which corporate taxes are the most harmful type of tax for economic growth, followed by personal income taxes and then consumption taxes, with recurrent taxes on immovable property being the least harmful tax. Growth-oriented tax reform measures include tax base broadening and a reduction in the top marginal personal income tax rates. Some degree of support for R&D through the tax system may help to increase private spending on innovation.
But implementing pro-growth tax reforms may not be easy. This report identifies those public and political economy tax reform strategies that will allow policy makers to reconcile differing tax policy objectives and overcome obstacles to reform. It stresses that with clear vision, strong leadership and solid tax policy analysis, growth-oriented tax reform can indeed be realised.