## Progress of the Personal Income Tax in Emerging and Developing Countries

_IMF Working Papers, January 28, 2022_

## Source details

**Canonical URL:** [Progress of the Personal Income Tax in Emerging and Developing Countries](https://www.imf.org/en/publications/wp/issues/2022/01/28/progress-of-the-personal-income-tax-in-emerging-and-developing-countries-512234)

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## Bibliographic details
- Authors: Dora Benedek, Juan Carlos Benitez, Charles Vellutini
- Published: January 28, 2022
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9798400201134.001

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### Summary findings
- Personal Income Tax (PIT) plays a key revenue role in Advanced Economies (AEs) but a much more limited role in Low-Income Developing Countries (LIDCs) and Emerging Market Economies (EMEs) in terms of revenue and redistributive impact.
- LIDCs increased their PIT-to-GDP revenue by 110 percent during the 1990-2019 period.
- EMEs increased their PIT-to-GDP revenue by 48 percent during the 1990-2019 period.
- The contribution of the PIT to inequality reductions in LIDCs has been significant, based on a novel redistribution index estimated by the authors.

### Drivers and analysis
- The rise in PIT-to-GDP revenue in LIDCs and EMEs was driven primarily by economic developments and to a lesser extent by changes in the design of PIT systems.
- LIDCs that improved their tax-to-GDP ratios relied on a broader set of tax instruments and not exclusively on the PIT, indicating revenue mobilization success is linked to a comprehensive approach covering a wider range of taxes.

### Data and methodology
- A newly assembled dataset of PIT characteristics covers 157 countries over the 2006-2018 period.
- The paper estimates a novel redistribution index of the PIT in LIDCs using the assembled dataset.

### Policy implications and recommendations
- Successful revenue mobilization strategies for developing countries require a comprehensive approach that includes a wider range of taxes rather than relying exclusively on the PIT.
- Improving PIT revenue performance in LIDCs and EMEs may depend more on favorable economic developments in conjunction with targeted changes in PIT system design.

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_Source: https://www.imf.org/en/publications/wp/issues/2022/01/28/progress-of-the-personal-income-tax-in-emerging-and-developing-countries-512234_