The Tax System in India: Could Reform Spur Growth?, Issues 2006-2093This paper assesses the effects of India's tax system on growth, through the level and productivity of private investment. Comparison of India's indicators of effective tax rates and tax revenue productivity with other countries shows that the Indian tax system is characterized by: (1) a high dependence on indirect taxes, (2) low average effective tax rates and tax productivity, and (3) high marginal effective tax rates and large tax-induced distortions on investment and financing decisions. The paper finds that the most recently proposed package of reforms would improve tax productivity and lower the marginal tax burden and tax-induced distortions. But firms that rely on internal sources of funds or face problems borrowing would continue to face high marginal tax rates. |
Common terms and phrases
AETR on capital AETR on consumption AETR on labor agricultural income Asian Average Effective Tax calculated capital gains tax capital income central government CENVAT Cooperation and Development Corporate Income Tax corporate tax debt finance Development 2001 Dividend Economic Cooperation effective CIT rate effective tax rate Effective Tax Wedge emerging market countries equity estimates for India European Union excise duties exemptions further growth incentives indirect taxes International Monetary Fund Joumard levied long-term capital gains lower statutory rates Marginal Effective Tax marginal tax burden marginal tax wedge METW OECD average operating surplus Organization for Economic percent of GDP personal taxes rate of return ratio reduced retained earnings Revenue Productivity sales taxes sectors service tax Sources Sri Lanka staff estimates standard deviation Statutory CIT Rate statutory tax rate STYLIZED FACTS tax base Tax CIT tax productivity tax reforms tax revenue tax-induced distortions Taxation Thailand United Kingdom United Kingdom United
References to this book
SAFTA: Living in a World of Regional Trade Agreements Jose Daniel Rodríguez-Delgado No preview available - 2010 |