I. a) Complete the text using the words in the box. Discuss the raised problems afterwards:
Tax Policy for Emerging Markets: Developing countries
tax policy; tax incentives, personal income tax, tax system, tax administration, import tariffs, tax revenue, corporate income tax, value-added tax, excises
This abstract discusses important tax policy issues facing developing
countries today. It views tax policy from both the macroeconomic
perspective, which focuses on broad questions such as the level and
composition of (1)…, and the microeconomic perspective, which
focuses on certain design aspects of selected major taxes, such as the
(2).. .., (3) …, (4) …, (5) …, and (6) … .It provides a review of the role of (7) …in these countries, and identifies some policy changes posed by the globalization of the world economy.
The study of (8) … is concerned with the design of a tax system that is capable of financing the necessary level of public spending in the most efficient and equitable way possible. In developing countries with emerging markets, and especially in those that aim at becoming integrated with the international economy, tax policy must play a
particularly sensitive role. In these countries, the (9) … should: 1) raise enough revenue to finance essential expenditures without recourse to excessive public sector borrowing; 2) raise the revenue in ways that are equitable and that minimize its disincentive effects on economic activities; and 3) do so in ways that do not deviate substantially from international norms.
In developing countries, the establishment of effective and efficient tax systems faces some formidable challenges. The first of these challenges is the structure of the economy that makes it difficult to impose and
collect certain taxes. The second is the limited capacity of the (10)
The third is the paucity, or the poor quality, of basic data. Finally, in many developing countries the political set up is less amenable to rational tax policy than in advanced countries.
b). Complete the text using the words in the box:
Diversity of tax systems
|to be compatible with; social security contributions; to levy taxes; unanimity; tax measures; to standardize; customs duties; compulsory taxes|
Tax policy is a symbol of national sovereignty and part of a country's overall economic policy, helping finance public spending and redistribute income. In the European Union, responsibility for tax policy mainly lies with the Member States, who may delegate some of it from central to regional or local level, depending on the constitutional or administrative structure of government.
The European Union plays a subsidiary role on taxes and (1) … .Its aim is not to (2)… the national systems of (3).................................... and contributions but simply
to ensure that they are (4) …not only with each other but also with the aims
of the Treaty establishing the European Community. Article 269 of the EC Treaty requires the Community budget to be wholly financed from own resources. These depend on Member States' capacity to contribute. At present these own resources consist of agricultural levies, (5)… , a percentage of VAT revenue calculated on a harmonized basis and GNP-based resources. The European Union has no power to create or (6) … .
However, in the single market it is important to see that Member States'
(7)... . do not hamper the free movement of goods, services and capital
or distort competition. Progress on the harmonization and coordination
of taxation has been fairly slow, but this is due to the complexity of the
issues involved and the fact that the relevant articles of the EC Treaty
require (8) for any change.
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