Dominican Republic Gearing Up for a More Efficient Tax System : An Assessment of Tax Efficiency, a Cost-Benefit Analysis of Tax Expenditures, and an Exploration of Labor Informality and its Tax Implications

World Bank

World Bank, Washington, DC

关键词: TAX ADMINISTRATION;    TAXATION;    TAX EFFICIENCY;    VALUE-ADDED TAX;    INCOME TAX;   

RP-ID  :  ACS22697

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

This study discusses options how toincrease the Dominican Republic tax revenue and attempts toidentify priority areas for efficiency-enhancing reforms. A2016 World Bank report on Dominican fiscal policy found thatthe country's tax expenditures were poorly targeted andregressively distributed, benefitting the wealthy more thanthe poor, and imposed considerable fiscal and economiccosts. The report also showed that the tax contribution ofthe informal sector is extremely low, despite the fact thatinformal workers account for roughly half of the activelabor force. As the new government prepares the ‘fiscalpact' first described in the country's developmentstrategy 2030, policymakers will require a more thoroughunderstanding of these issues and their fiscal, economic,and distributional implications. Thus, building on pastanalytical work, the present study focuses on two priorityareas: tax efficiency and labor informality. Chapter Onereveals that the DR's strong and sustained economicgrowth in recent years has had only a modest impact onrevenues' efficiency from value-added tax, corporateincome tax, personal income tax, and minor taxes. Ananalysis of tax-collection efficiency reveals severalfeasible options for boosting tax revenues. Chapter Twoexplores the characteristics, correlates, and effects ofwidespread labor informality in the DR. Identifying thecorrelates of informality yield important implications forpromoting formalization and thereby broadening theincome-tax base.