Introduction: Tax Policy Issues for the 1990s

Abstract

In recent years, in the wake of fiscal crisis, developing countries have increasingly begun to restructure their tax systems to seek higher revenues or to improve the revenue elasticity and buoyancy of the tax structure (Chhibber and Khalilzadeh-Shirazi 1988). These reform movements have also aimed to eliminate the disincentive effects of onerous levels of taxation, to reduce the economic inefficiencies induced by the distortionary taxation of assets and sectors, to protect the poorest of the poor from the tax net, and to provide partial relief from the unwelcome effects of inflation. This introduction to the following articles on tax policy first gives an overview of tax reform in developing countries. It then distills lessons for tax reform from past developing-country experiences and reviews selected issues that are expected to dominate tax policy research and discussions in the 1990s. The five other articles in this symposium provide an in-depth review of applications of tax policy models in developing countries and analysis of tax policy toward foreign direct investment, taxation of agricultural land and financial assets, and the redistributive impacts of various taxes.