European Nations To Fund Central American/Caribbean Tax Study

by Amanda Banks, Tax-News.com, London

03 June 2004

The governments of Britain, Norway and Sweden, through the Inter-American Development Agency, are to help finance a study of tax reforms taking place in Central American and Caribbean countries, including Costa Rica and Belize.

According to an IDB announcement last week, Britain’s Department for International Development (DFID), the Norwegian Agency for Development Cooperation (Norad) and the Swedish International Development Cooperation Agency (Sida) will contribute a total of $900,000 in grants to finance a series of studies and activities, designed to build social consensus on deepening fiscal reforms in Central American and Caribbean countries.

The Bank's statement observed that the tax revenues of certain countries in the region have often been “notoriously low”, a fact it attributed to public mistrust of the way in which governments conduct their fiscal affairs, which has in turn led to a lack of general compliance.

The IDB expects that the studies will offer countries different policy options to deepen tax reforms, improve their budgetary management, target spending on the most needy and vulnerable groups of their population, and strengthen transparency and accountability in the public sector.

“It is important to begin to change Central American perceptions about the futility of paying taxes to governments that spend inefficiently and without due accountability. This can be done by building trust in how public resources are invested, as well as by strengthening each country’s social contract to address shared problems,” noted IDB Regional Economic Advisor Manuel Agosin, who will coordinate the studies.

Recommended