After many years of feeble growth, the International Monetary Fund (IMF) is expecting global economic activity to pick up this year and next, and across both the advanced and emerging economies, said IMF managing director Christine Lagarde.
“However, this does not mean we are out of the woods. Conflicts and lower oil prices will continue to affect growth and, by extension, also government revenue,” she added, speaking at the second Arab Fiscal Forum, which opened in Dubai.
“While oil prices have increased recently, we do not expect them to return to levels we have seen before 2014. And there are, of course, questions about geopolitical developments in many regions of the world,” Lagarde said.
“So, today I would like to pose the question: how can countries build tax capacity to sow the seeds of a healthy and inclusive economy, for the benefit of all citizens? The momentum toward revenue mobilisation, and the associated work going on at the international level, present the region with a major opportunity. By creating state-of-the-art tax systems, countries can generate resources needed to tackle future challenges and do so in an efficient and equitable manner,” she explained.
“This, of course, requires a clear and comprehensive strategy that interlinks tax policy reform with revenue administration reform. In other words, what and whom to tax should go hand in hand with how you go about collecting these taxes.
“As a first step, countries are introducing VAT and other consumption taxes for example on tobacco and sugar-sweetened beverages. Over time, governments may also consider deriving additional revenue from income and property taxation,” Lagarde continued.