Options for further tax reform

Author(s): Moore, Winston (2005)

Created 01 Jan, 2005
Categories Working Papers
Views: 2076
Economists have long suggested that the burden of taxation should fall on consumption in order to stimulate savings. In Barbados, however, relatively high marginal taxes on income and profits have been the norm for most of the nationÂ’s history. This study considers a number of options for reforming the present tax structure in Barbados. The alternatives outlined range from minor tinkering with current rates to an entire new system. Based on both social and economic cost-benefit analysis, the study finds that a reduction in taxes on income and profits and a slight increase in the rate of VAT or the introduction of a flat tax can lead to significant economic gains without affecting the sustainability of governmentÂ’s accounts.

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