Tax policy and tax reform in semi-industrial countries

The main objectives of this report are to review tax policy as implemented in developing countries, to examine the problems that arise and to explore potential avenues for tax reform. Among the major issues are: (1) savings and investment disincentives; (2) intersectoral variation in effective tax rates; and (3) trade distortion. The range of tax reform involves both direct and indirect taxes. Among the potential reforms in direct taxes are: (1) broadening of the tax base; (2) consolidation of the fragmented bases; (3) a shift of the tax base toward consumption. With regard to indirect taxes: (1) rationalization of the tax base to avoid multiple taxation; (2) exemption of indirect taxes on capital goods in general to enhance the yields from investment; (3) tax remission for exporters and non-discriminatory treatments of imports to improve resource allocation.