IMF Fiscal Affairs E-Newsletter

Fiscal Affairs Department (FAD) - November 2014

Publications

"Coordinating Climate and Trade Policies: Pareto Efficiency and the Role of Border Tax Adjustments," Michael Keen and Christos Kotsogiannis, Journal of International Economics, Vol. 94, Issue 1, pp. 119–128.

"Thresholds, Informality, and Partitions of Compliance," Michael Keen and Ravi Kanbur, International Tax and Public Finance, Vol. 21, pp. 536–559.

"How Should Different Countries Tax Fuels to Correct Environmental Externalities?" Ian Parry, Dirk Heine, Shanjun Li, and Eliza Liz, Economics of Energy and Environmental Policy, Vol. 3, No. 2, pp. 61–80.

IMF Working Papers

"Defining a Fiscal Framework for a Prospective Commodity Producer: Options for Lebanon," Mariusz Jarmuzek, Diego Mesa Puyo, and Najla Nakhle, WP No. 14/193.

"Public Employment and Compensation Reform During Times of Fiscal Consolidation," Lorenzo Forni and Natalija Novta, WP No. 14/192.

"The Making of a Continental Financial System: Lessons for Europe from Early American History," Vitor Gaspar, WP No. 14/183.

"How Much is A Lot? Historical Evidence on the Size of Fiscal Adjustments," Julio Escolano, Laura Jaramillo, Carlos Mulas-Granados, and Gilbert Terrier, WP No. 14/179.

"How Much Carbon Pricing Is In Countries’ Own Interests? The Critical Role of Co-Benefits," Ian Parry, Chandara Veung, and Dirk Heine, WP No. 14/174.

"Budget Institutions in Low-Income Countries: Lessons from G-20," Sanjeev Gupta and Sami Yläoutinen, WP No. 14/164.

"Sovereign Debt Composition in Advanced Economies: A Historical Perspective," S. Ali Abbas, Laura Blattner, Mark De Broeck, Asmaa El-Ganainy, and Malin Hu, WP No. 14/162.

"Health Spending in Japan: Macro-Fiscal Implications and Reform Options," Masahiro Nozaki, Kenichiro Kashiwase, and Ikuo Saito, WP No. 14/142.

"Japan’s Corporate Income Tax: Facts, Issues and Reform Options," Ruud A. de Mooij and Ikuo Saito, WP No. 14/138.

Latest Fiscal Monitor Examines Policies to Boost Job Creation

At a time when job creation tops the policy agenda globally, this issue of the Fiscal Monitor explores if and how fiscal policy can do more for jobs. It finds that while fiscal policy cannot substitute for comprehensive reforms, it can support job creation in a number of ways. First, deficit reduction can be designed and timed to minimize negative effects on employment. Second, fiscal policy can facilitate structural reforms in the labor market by offsetting their potential short-term costs. And third, targeted fiscal measures, including labor tax cuts, can help tackle challenges in specific segments of the labor market, such as youth and older workers.

FAD's 50th Anniversary Conference: “Fiscal Affairs, Past and Future”

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On December 5th, FAD will mark its 50th Anniversary with a one-day conference on “Fiscal Affairs, Past and Future.”

The event will bring together fiscal policy experts, senior policy makers, and IMF staff to discuss the evolution of fiscal policy over the past half century and the challenges likely to lie ahead.

The conference will also be an occasion to look at the role of FAD in addressing fiscal policy making and implementation challenges, and to present FAD’s strategy looking forward. Speakers include: Alan Auerbach, Ravi Kanbur, Stanley Fischer, Lawrence Summers, Simon Johnson as well as former FAD Directors, Vito Tanzi, Teresa Ter-Minassian, and Carlo Cottarelli.

Building Future Capacity: Drawing on 50 Years of Experience

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At the recent IMF-World Bank Annual Meetings, the IMF celebrated 50 years of providing capacity building to its member countries with a high-level panel discussion.

The panel brought together country officials, donors, and experts, moderated by FAD’s former Director, Carlo Cottarelli, to discuss the future of capacity building in light of 50 years of experience. Panelists debated the lessons to draw from their experience with technical assistance (TA) and training, and put forward several suggestions on how the Fund can better address the TA needs of its members. Panelists underscored the key role of long-term experts in generating trust among TA recipients. They also suggested that the Fund provides online case studies on how countries have handled TA-related problems.

FAD Publishes New Book on Post-Crisis Fiscal Policy

MIT Press recently published a new book,prepared by FAD staff, that brings together the analysis underpinning the IMF’s position on the evolving role of post-crisis fiscal policy.

The book offers lessons learned from the crisis and its aftermath. Topics discussed include a historical view of debt accumulation; the timing, size, and composition of fiscal stimulus packages in advanced and emerging economies; the heated debate surrounding the size of fiscal multipliers and the effectiveness of fiscal policy as a countercyclical tool; coordination of fiscal and monetary policies; the sovereign debt crisis in Europe; and institutional reform aimed at fostering fiscal discipline. While the analysis is deeply rooted in analytical work, the book is mostly non-technical and written with a wide audience in mind.

New book: "Getting Energy Prices Right"

Energy taxes can produce substantial environmental and revenue benefits and are an important component of countries' fiscal systems. Although the principle that these taxes should reflect adverse environmental impacts of energy use is well established, there has been little previous work providing guidance on how countries can put this principle into practice.

This book develops a practical methodology, and associated tools, to show how the major environmental damages from energy can be quantified for different countries and used to design an efficient set of energy taxes.

At a global level, implementing efficient energy prices would reduce carbon emissions by an estimated 23 percent and fossil-fuel air pollution deaths by 63 percent, while raising revenues averaging 2.6 percent of GDP.

FAD Signs Agreement to Establish RA-FIT as a Common Platform for Tax Administration Data

FAD launched a revenue administration data gathering tool in 2012 known as the Revenue Administration Fiscal Information Tool (RA-FIT). The tool has evolved from an Excel spreadsheet to an online web-based platform. Interest from other international organizations gathering tax administration data has culminated in the ground-breaking signing of a Letter of Intent (LOI) on October 24, 2014 at a tax administration event in Dublin, between the IMF, CIAT, IOTA, and the OECD. In this LOI the organizations have agreed to commence formal discussions to establish RA-FIT as the common platform for the collection of tax administration data. This is an important step towards the collaborative use of a common platform that will result in a single, annual survey. A major benefit to tax administrators is the elimination of multiple data requests for the same information. The RA-FIT platform also permits improved dissemination, including respondents having access to the data much earlier than at present.

FAD Receives about 110 Technical Assistance Requests during the Annual Meetings

During the 2014 Annual Meetings of the IMF and the World Bank, FAD held meetings with 100 country delegations, more than half of which were led by their respective finance ministers. About 110 technical assistance (TA) requests were received during these meetings. TA demand covered the entire spectrum of fiscal issues, with a focus on strengthening fiscal institutions, particularly in public financial management and revenue mobilization. An area of increasing interest for TA was public spending reviews.