Choosing a Broad Base – Low Rate Approach to Taxation

Many countries are likely to have to raise taxes as part of fiscal consolidation over the next few years, but how is this best done – by broadening the tax base or raising tax rates? This study is intended to provide economic analysis that helps answer such questions. As the OECD Secretary-General remarked at the G20 Summit held last June in Toronto, fiscal consolidation should be as growth-friendly as possible. In general tax base-broadening reforms are identified as growth-oriented reforms. To the extent that they reduce distortions to economic decisions, they should increase output and improve social welfare. Nevertheless, there might be also “good” economic reasons for...
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Choosing a Broad Base – Low Rate Approach to Taxation