IMF Recommends Global Tax Changes

October 14, 2013 International Tax Cooperation

 South Africa tax filingWASHINGTON D.C. – Income and consumption taxes around the world need to be hiked, new financial transaction taxes need to be implemented, and non-compliance needs to be stamped out.

Over the past weekend the International Monetary Fund released its latest Fiscal Monitor report, recommending that governments around the world should re-examine their national tax systems, and they have to expand national tax bases, and reevaluate the effectiveness and fairness of currently available tax allowances.

The IMF noted that by increasing tax rates on the incomes of wealthy individuals, governments may draw greater tax revenues, but they also warned against the implementation of disproportionately high marginal tax rates, saying that in most cases a rate of 60 percent should be considered as a maximum.

In its report the IMF also showed that over the last three decades the tax obligations of wealthy individuals have fallen in most countries, and raising taxes now to the same level as in the 1980s would increase tax revenues by the equivalent of 0.25 percent of the GDP of all IMF member nations combined.

Governments around the world were also recommend to expand their consumption tax systems, while, at the same time, introducing new rules to ensure that low-earning taxpayers are not too adversely affected by any hikes.

In order to raise greater tax revenues from corporate taxpayers without any negative effects the economy, the IMF recommend that more research should be conducted to identify and remove inefficient tax allowances being offered to businesses.

Describing the situation in the international financial sector, the IMF noted the need to introduce a tax on on high-frequency trading, and on other highly volatile financial activities.

The IMF also called for governments to promote tax fairness and to remove tax distortions from legal regulations by improving compliance among taxpayers, and by clamping down on illicit tax activity.

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