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Economic Policy Reforms 2009

Going for Growth

image of Economic Policy Reforms 2009
Going for Growth 2009 highlights the most appropriate structural reforms to pursue to improve performance, takes stock of recent progress in implementing structural policy reforms and identifies five policy priorities for each OECD country that could lift economic growth in the long run. It calls for reforms in a number of areas in order to strengthen labour productivity and employment, including reforms to education systems, product market regulation, agricultural policies, tax and benefit systems, health care and labour market policies. In addition, this issue contains four analytical chapters covering taxation and economic growth, reform of product market regulation, infrastructure investment and the effect of population structure on employment and productivity.

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Taxation and Economic Growth

Tax systems differ widely across OECD countries and these variations explain part of the differences in economic performance and, in turn, differences in living standards. This chapter examines how to design tax systems to be less of a drag on economic growth. Corporate taxes are found to be the most harmful for growth, followed by personal income taxes, and then consumption taxes. Recurrent taxes on immovable property appear to have the least impact. A revenue neutral growthoriented tax reform would, therefore, be to shift part of the revenue base from income taxes to less distortive taxes such as recurrent taxes on immovable property or consumption.

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