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World Bank, IMF launch initiative to help strengthen Caribbean tax systems

Published:Sunday | July 12, 2015 | 12:00 AM
The World Bank building in Washington, DC.

WASHINGTON, CMC – The World Bank and the International Monetary Fund (IMF) will be launching a new initiative to help developing countries, including those in the Caribbean, strengthen their tax systems.

Analysis suggest that many lower-income countries have the potential to increase their tax ratios by at least two to four per cent of Gross Domestic Product (GDP), without compromising fairness or growth.

On Friday, the World Bank said raising additional revenues will allow developing countries and the Caribbean to fill financing gaps and to promote development.

The announcement comes ahead of the “Financing for Development” conference in Addis Ababa, Ethiopia next week at which heads of state, multilateral institutions and private sector representatives will discuss how to scale up finances to meet the Sustainable Development Goals (SDGs).

“We very much want to help developing countries raise more revenues through taxes because this can lead to more children receiving a good education and more families having access to quality health care,” said World Bank Group President Jim Yong Kim.

“If everyone pays their fair share developing countries can close their financing gaps and promote inclusive growth,” he added.

The IMF Managing Director Christine Lagarde said a strong revenue base is “imperative if developing countries are to be able to finance the spending they need on public services, social support and infrastructure.

“But experience shows that with well-targeted external technical support and sufficient political will, it can be done,” she said.

Responding to country demands, the IMF/World Bank initiative has two pillars – to deepen the dialogue with developing countries on international tax issues, aiming to help increase their voice in the international debate on tax rules and cooperation.

The initiative also provides diagnostic tools in helping member-countries evaluate and strengthen their tax policies.

The institutions also plan to strengthen their diagnostic tools, to develop new methodologies where needed, to enable member-countries to identify priority tax reforms and design the requisite support for their implementation.

The World Bank says this effort would complement the launch of the Tax Administration Diagnostic Assessment Tool (TADAT) in November.