IMF Boss Urges US Tax Increases

by Mike Godfrey, Tax-News.com, Washington

16 November 2005

Speaking at a debate at the weekend, IMF chief Rodrigo Rato recommended that the United States government increase taxes in order to reduce the country's deficit.

"I understand that measures to raise revenue are not very popular in Washington, but neither are higher interest rates, more expensive goods or financial market turbulence, which are among the possible outcomes of a disorderly adjustment of global imbalances," he explained.

Mr Rato's recommendations follow the issuing of similar advice by the Organisation for Economic Cooperation and Development.

In its recently published Country Survey of the United States, the OECD observed that "some increase in revenues will be necessary" and that "a federal VAT should be considered", and further suggested that "retaining a personal income tax would allow the desired degree of progressivity of the overall tax system to be achieved".

Right-wing commentators in the US have however complained vociferously about inappropriate interference in the USA's domestic fiscal affairs by such international bodies.

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