INTERNATIONAL MONETARY FUND - Fiscal Affairs Department Newsletter

Tax Policy

June 2018

Digitalization

"Tax Incentives in Cambodia" Manuk Ghazanchyan, Alexander Klemm, Yong Sarah Zhou ; WP/18/71.

"At A Cost: The Real Effects of Transfer Pricing Regulations" Ruud de Mooij, Li Liu; WP/18/69.

"Canada's Carbon Price Floor" Ian Parry, Victor Mylonas; WP/18/42.

"Does Taxation Stifle Corporate Investment? Firm-Level Evidence from ASEAN Countries" Serhan Cevik, Fedor Miryugin; WP/18/34.

"Where Does Multinational Investment Go with Territorial Taxation? Evidence from the UK" Li Liu; WP/18/7.

"How Should Shale Gas Extraction Be Taxed?" Philip Daniel, Alan Krupnick, Thornton Matheson, Peter Mullins, Ian Parry, Artur Swistak; WP/17/254.

"Taxing Telecommunications in Developing Countries" Thornton Matheson, Patrick Petit; WP/17/247.

"Game-Changers and Whistle-Blowers: Taxing Wealth" James Brumby, Michael Keen; IMFBlog; February 2018.

"Sharing the Burden: Taxation of the Peer-to-Peer Economy" Aqib Aslam, Alpa Shah; PFMBlog; February 2018.

"Digital revolutions in public finance" Sanjeev Gupta, Michael Keen, Alpa Shah, Geneviève Verdier; VOX CEPR's Policy Portal; March 2018.

"Bank taxes, bailout and financial crises" Michael Keen; Finanzarchiv: Public Finance Analysis, Vol. 74, Issue 1, pp. 4-33; April 2018.

"Competition, coordination and avoidance in international taxation" Michael Keen; Bulletin of International Taxation, Vol. 72, No. 4/5; March 2018.

"Tax penalties of fluctuating incomes: estimates from longitudinal data" Jean-Francois Wen and Daniel V. Gordon; International Tax and Public Finance, Vol. 25, Issue 2, pp. 430–457; April 2018.

"The effects of the tax mix on inequality and growth" Oguzhan Akgun, Boris Cournède, Jean-Marc Fournier; OECD Economics Department Working Papers; November 2017.

"People's Republic of China: Technical Assistance Report—Tax Policy and Employment Creation" Alexander Klemm, Isaias Coelho, Alan Duncan, Li Liu; Country Report No. 18/92; March 2018.

"Uganda: Technical Assistance Report—Fiscal Regimes for Extractive Industries: Next Phase" Philip Daniel, Lee Burns, Diego Mesa Puyo, Emil M. Sunley; Country Report No. 17/368; December 2017.

Public Financial Management

"Independent Fiscal Councils: Recent Trends and Performance" Roel Beetsma, Xavier Debrun, Xiangming Fang, Young Kim, Victor Duarte Lledó, Samba Mbaye, Xiaoxiao Zhang; WP/18/68.

"Corruption, Taxes, and Compliance" Anja Baum, Sanjeev Gupta, Elijah Kimani, Sampawende J. Tapsobas; WP/17/255.

"Republic of Poland: Technical Assistance Report—Building Forward Estimates and Standardizing the Chart of Accounts" Jason Harris, Sagé De Clerck, Fazeer Rahim, Tim Pyney; Country Report No. 18/82; March 2018.

"Jordan: Technical Assistance Report—Public Investment Management Assessment (PIMA)" Yasmine Hürcan, Xavier Rame, Isabel Rial, Sefa Pamuksuz, Eivind Tandberg; Country Report No. 17/366; December 2017.

"Malawi: Technical Assistance Report—Strengthening Fundamental Controls and Reporting" Abdul Mudabbir Khan, Paul Seeds, Mozammal Hoque; Country Report No. 17/332; November 2017.

Expenditure Policy

"Globalization Helps Spread Knowledge and Technology Across Borders" Aqib Aslam, Johannes, Eugster, Giang Ho, Florence Jaumotte, Carolina Osorio-Buitron, Roberto Piazza; IMFBlog; April 2018.

"Chart of the Week: Inequality, Your Health, and Fiscal Policy" Mercedes García-Escribano, Baoping Shang, Emmanouil Kitsios; IMFBlog; February 2018.

"Does Trade Liberalization Narrow the Gender Wage Gap? The Role of Sectoral Mobility" Masha Brussevich; European Economic Review; March 2018.

"Income Inequality and Education Revisited: Persistence, Endogeneity and Heterogeneity" Dave Coady, Allan Dizioli; Journal of Applied Economics, Vol. 50, Issue 25, pp. 2747–2761; December 2017.

"Inequality and Poverty Across Generations in the European Union" Tingyun Chen, Jean-Jacques Hallaert, Alexander Pitt, Haonan Qu, Maximilien Queyranne, Alaina Rhee, Anna Shabunina, Jérôme Vandenbussche, Irene Yackovlev; Staff Discussion Notes 18/01; January 2018.

"Growing Pains: Is Latin America Prepared for Population Aging?" IMF staff team (including Mauricio Soto) led by Lorenzo Figliuoli; Policy Paper; April 2018.

"Public Wage Bills in the Middle East and Central Asia" IMF staff team (including Kamil Dybczak) led by Natalia Tamirisa and Christoph Duenwald; Policy Paper; April 2018.

Useful Links

IMF Fiscal Monitor

Contacts in FAD

PFM Blog

Fiscal Issues at the IMF

FAD Brochure

Revenue Mobilization (RMTF)

Managing Natural Resource Wealth (MNRW)

Fiscal Monitor: Capitalizing on Good Times
fiscal monitor

The Fiscal Monitor focused on two broad themes: debt and digital government. Global debt hit a new record high of $164 trillion in 2016, the equivalent of 225 percent of global GDP. The Monitor urged countries to use the window of opportunity afforded by the economic upswing to strengthen the state of their fiscal affairs. The analytical chapter on digitalization outlines both the opportunities and challenges at play as technology transforms fiscal policy.



Fiscal Forum: Corruption and Public-Sector Governance
fiscal forum

The IMF’s 9th Fiscal Forum, brought together policy makers from 63 countries, the private sector, academia and civil societies. The discussions focused on the role of fiscal transparency and effective revenue administration in curbing corruption and restoring trust in public institutions. The concluding panel included Christine Lagarde (Managing Director, IMF), Patricia Moreira (Transparency International), State Secretary Penny Mordaunt (UK), and Ministers from Paraguay (Lea Giménez-Duarte) and Benin (Abdoulaye Bio-Tchané) who shared poignant examples of how they combatted corruption in their countries.


Global Debt Database Launch
UBI Postcards

On May 14, The Institute of International Finance and the Fiscal Affairs Department co-hosted the launch of the Global Debt Database (GDD). The GDD is a cutting-edge dataset covering private and public debt for virtually the entire world (190 countries) dating back to the 1950s. It is the result of a multi-year investigative process that started with the October 2016 Fiscal Monitor, which pioneered the expansion of private debt series to a global sample. During the launch, a panel of experts reflected on the importance of these data to get a good understanding of who is leveraged and what it means for policymakers.



Fiscal Transparency Handbook
fiscal transparency handbook launch

FAD launched its Fiscal Transparency Handbook on April 21. The Handbook explains the principles and practices set out in the 2014 Fiscal Transparency Code – the widely-recognized international standard for the disclosure of information about public finances. It provides detailed guidance – illustrated by many country examples – on the implementation of the Code’s principles. The Handbook outlines how governments strengthen fiscal governance, be more transparent, and fight corruption. The fiscal transparency web page provides information on the Fiscal Transparency Code and Fiscal Transparency Evaluations.


Tax Reform Database
Tax Reform Database

On April 26, FAD held a high-level conference gathering prominent researchers and experts in the tax domain, to discuss questions such as: How can tax policy help enhance revenue collection and support growth? How will financial markets respond to the announcement of a tax reform? And, can we quantify the effects that a tax reform in a country might have on the tax system of other countries? The conference launched the Tax Policy Reform Database, available here.



African Fiscal Forum
ciat_51asamblea_logo

The sixth African Fiscal Forum was held in Lusaka, Zambia on February 8–9. The event, organized by FAD and the Zambian Ministry of Finance, brought together 70 participants including senior officials from ministries of finance and tax administrations across 28 Sub Saharan African countries. Titled ‘Fiscal Policy in an Evolving World’ it focused on challenges such as taxing multi-national companies, and opportunities such as improved revenue collection and targeted spending through the use of digital technology. Participants shared country experiences and engaged in peer learning.


Arab Fiscal Forum
arab fiscal forum

On February 10, the Arab Fiscal Forum was held in Dubai. The event, jointly organized by the Arab Monetary Fund and the IMF focused on expenditure policies to promote inclusive growth and ensure a sustainable fiscal path. Christine Lagarde (Managing Director, IMF) attended along with high-level policymakers and experts from regional and international financial organizations, finance ministries and central banks. The forum sessions covered regional economic developments, the efficiency of public spending, subsidy reforms, and digital revolutions in public finance.


Workshop at Gender Budgeting in Southeastern European Countries
jvi gender budgeting

A workshop on gender budgeting for southeastern European countries was held at the Joint Vienna Institute (JVI) from February 20-22. The event marked the initial step towards the creation of a new community of practice on gender budgeting in the region. It brought together representatives from ministries of finance and agencies/ministries responsible for gender equality from 13 countries, including Austria, a world leader in gender budgeting. Participants presented case studies to identify good practices in the region.


Second-Generation Fiscal Rules
2nd Gen. Fiscal Ruls SDN
Today about 90 countries have fiscal rules, a substantial increase over the last 20 years. But in recent years, rules have been criticized as too rigid, too flexible and too complicated. In a series of staff discussion note on second-generation rules, which is accompanied by six background papers, FAD takes stock of these developments and makes recommendations on how to improve the rule design. At the operational level, FAD has also published two how-to notes explaining how to select and calibrate fiscal rules.


The Present and Future of Taxation by Formula
Taxation by Formula

On April 22, FAD and the World Bank’s Global Governance Practice co-hosted a three-session event, the prospects of formula apportionment methods as an alternative to the current arm’s-length principle in allocating taxable profit of multinationals across jurisdictions. Subnational experiences from Canada, the United States, and the European Commission’s proposal for such a system in Europe were presented. Participants highlighted that while some view formula apportionment as simpler, more transparent, equitable, and less vulnerable to traditional profit shifting strategies than separate accounting, the implementation of such an alternative faces several challenges and may not necessarily be more efficient.


Ireland PIMA
Ireland PIMA

In July 2017, FAD conducted a PIMA mission to Ireland. The report was published in November 2017. In a press release, the Irish Minister for Finance and Public Expenditure and Reform, Paschal Donohoe, said: “I welcome the publication of the PIMA for Ireland, which was specifically tailored to Ireland's particular needs. The PIMA will play an important role in identifying how institutions and public governance systems in Ireland who are responsible for planning, allocating and delivering public capital infrastructure might be further strengthened.”



Fiscal Transparency
GDD Launch

A discussion on fiscal transparency in Brazil took place during the IMF-WB Spring Meetings as part of the IMF’s Postcard series on capacity development. Fabien Gonguet presented the rationale for fiscal transparency (comprehensiveness, timeliness and clarity of fiscal information) and outlined the tools developed by the IMF to deepen it. Pedro Juca (Brazilian treasury) talked about Brazil’s efforts toward greater fiscal transparency and detailed how FAD and the Brazilian government have cooperated in recent years to support the government in the face of new transparency challenges.



Enhanced IMF Engagement on Governance
governance and corruption

The IMF Board discussed on April 6, a policy paper, updating the 1997 Guidance Note on Governance. The paper offers a framework for a consistent and evenhanded engagement of the Fund on governance and corruption issues. The paper emphasizes the role of strong fiscal institutions to reduce vulnerabilities to corruption.





IMF-Japan Tax Conference for Asian Countries
IMF-Japan Tax Conference

Organized by FAD and Japan’s Ministry of Finance, with support from the IMF's Office for Asia and the Pacific, the 9th annual conference was attended by 48 senior officials in tax policy departments and tax administrations in Asia – the largest group the largest group to attend this event. Deputy Managing Director Furusawa delivered the opening address. The conference covered emerging tax issues including international taxation, taxation and digitalization, and VAT refunds.



"The Digital Gamble: New Technology Transforms Fiscal Policy" Vitor Gaspar, Geneviève Verdier; IMFBlog; April 2018.

"Digital revolutions in public finance" Sanjeev Gupta, Michael Keen, Alpa Shah, Geneviève Verdier; VOX CEPR’s Policy Portal; March 2018.

"Public Finance Goes Digital" Sanjeev Gupta, Michael Keen, Alpa Shah, Geneviève Verdier; Finance & Development; March 2018.

Macrofiscal

"Thou Shalt Not Breach: The Impact on Sovereign Spreads of Noncomplying with the EU Fiscal Rules" Federico Diaz Kalan, Adina Popescu, Julien Reynaud; WP/18/87.

"Intergovernmental Fiscal Reform in China" Philippe Wingender; WP/18/88.

"When Do We Repair the Roof? Insights from Responses to Fiscal Crisis Early Warning Signals" Jiro Honda, Rene Tapsoba, Ismael Issifou; WP/18/77.

"Monetary Policy Transmission in the Eastern Caribbean Currency Union" Alla Myrvoda, Julien Reynaud; WP/18/70.

"Structural Reforms and Firms' Productivity: Evidence from Developing Countries" Wilfried A. Kouamé, Sampawende J.Tapsoba; WP/18/63.

"Italy: Toward a Growth-Friendly Fiscal Reform" Michal Andrle, Shafik Hebous, Alvar Kangur, Mehdi Raissi; WP/18/59.

"Video: Fiscal Monitor Press Briefing".

"An Application of Distribution-Neutral Fiscal Policy" Sanjeev Gupta, Marjit Sugata, Sandip Sarkar; WP/18/12.

"The Slowdown in Global Trade: A Symptom of a Weak Recovery" Aqib Aslam, Emine Boz, Eugenio M. Cerutti, Marcos Poplawski-Ribeiro, Petai Topalova; WP/17/242.

"Fiscal Spillovers in the Euro Area: Letting the Data Speak" Era Dabla-Norris, Pietro Dallari, Tigran Poghosyan; WP/17/241.

"Nowcashing: Using Daily Fiscal Data for Real-Time Macroeconomic Analysis" Florian Misch, Brian Olden, Marcos Poplawski-Ribeiro, Lamya Kejji; WP/17/227.

"Bringing Down High Debt" Vitor Gaspar, Laura Jaramillo; IMFBlog; April 2018.

"Fiscal Rules: Make Them Easy to Love and hard to Cheat" Xavier Debrun, Luc Eyraud, Andrew Hodge, Victor Lledó, Catherine Pattillo, Abdelhak Senhadji; IMFBlog; April 2018.

"Taxes, Debt, and Development: A One-Percent Rule to Raise Revenues in Africa" Vitor Gaspar, Abebe Aemro Selassie; IMFBlog; December 2017.

"Fiscal Politics: A historic meeting laid the foundations of US finances" Vitor Gaspar, David Amaglobeli; Finance & Development, Vol. 55, No. 1; March 2018.

"The Debt Web" Mark De Broeck, Era Dabla-Norris, Nicolas End, Marina Marinkov; Finance & Development, Vol. 55, No. 1; March 2018.

"Smooth operator: remittances and household consumption during fiscal shocks" Kimberly Beaton, Serhan Cevik, Reza Yousefi; The B.E. Journal of Macroeconomics; February 2018.

"Soft power and exchange rate volatility" Serhan Cevik, Richard Harris, Fatih Yilmaz; International Finance, Vol. 20, Issue 3, pp. 271–288; November 2017.

"Fiscal Consequences of Shrinking and Ageing Populations" Benedict Clements, Kamil Dybczak, Vitor Gaspar, Sanjeev Gupta, Mauricio Soto; Ageing International; November 2017.

"Côte d’Ivoire: Technical Assistance Report—Modernizing the Analysis, Monitoring, and Disclosure of Fiscal Risks" Fabien Gonguet, Thomas Krukdjian, Clemens Mungenast, René Tapsoba; Country Report 18/92; March 2018.

"Armenia: Technical Assistance Report—Upgrading Fiscal Rules" Era Dabla-Norris, Nicolas End, Fazeer Rahim, John Zohrab, Matt Crooke; Country Report 17/330; November 2017.

FAD in the Media

"Trump Tax Plan Will Make U.S. Only Advanced Economy to See Its Public Debt Ration Increase, IMF Warns -Newsweek.

"IMF says Bahrain, Kuwait, Oman, Qatar will need more than a year to introduce VAT -Gulf Business.

"IMF Says China's Complex Fiscal System Needs 'Crucial' Overhaul" -Bloomberg.

"IMF calls for transparency in debt commitments by countries" -The New Indian Press.

"African nations slipping into new debt crisis" -Financial Times.

"Global debt is at historic highs and governments should start cutting levels now, the IMF says" -CNBC.

"World debt hits record $164 trillion as crisis hangover lingers" -The Star.

"This is How Much Money the World Owes" -Fortune.

Further Information

For more details on any of these stories, contact us at fiscalaffairs@imf.org

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