From a Developing to an Emerging Economy: Côte d'Ivoire's Tax Policy Challenges

Tax Design for Inclusive Economic Growth

“…Although trade taxes hinder investment, raising revenues through the PIT may be a weak option for developing countries where taxpayers can easily hide their income and/ or operate in the informal economy. Such a tax shift may then result in a reduction in tax revenues which reduces the resources available for investment in basic public goods and may lower overall economic growth (Perret et al, 2016).…”

“…drop in economic activity). When designing strategies that induce businesses to operate in the formal economy, tax administrations may also want to target their tax enforcement efforts to entire value chains and businesses that are competing within their economy (Perret et al, 2016). Indeed, tax policy design and tax enforcement need to go hand in hand.…”

“…Countries with a large informal economy have a narrow tax base because a significant share of the economy is shielded from the tax system, typically high statutory tax rates that are only paid by agents whose income is highly visible and, in order to raise sufficient tax revenues, a tax mix which includes some particularly distortive taxes such as financial transaction taxes. Those countries then typically have to turn to generous tax incentives to improve the investment climate (Perret et al, 2016). …”