Alternative Approaches to Taxing the Financial Sector: Which is Best and Where Does Chile Stand?
AbstractIn contrast to the enthusiasm of some observers for sweeping reforms to financial sector taxation (such as abolishing taxation of capital income or introducing a universal transactions tax), this paper argues that practical policy needs to pay special attention to the potential for tax arbitrage, and to avoiding a system that is too sensitive to inflation. A review of the main features of Chile's financial sector taxation regime (in particular the stamp taxes on checks and on loans) against this background shows some strengths, though the rates are somewhat higher than would result from a VAT applied systematically to financial services at the standard rate.
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Bibliographic InfoPaper provided by Central Bank of Chile in its series Working Papers Central Bank of Chile with number 225.
Date of creation: Oct 2003
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Other versions of this item:
- Patrick Honohan, 2004. "Alternative Approaches to Taxing the Financial Sector: Wich is Best and Where Does Chile Stand?," Central Banking, Analysis, and Economic Policies Book Series, in: Luis Antonio Ahumada & J. Rodrigo Fuentes & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Se (ed.), Banking Market Structure and Monetary Policy, edition 1, volume 7, chapter 11, pages 315-344 Central Bank of Chile.
- NEP-ALL-2003-10-12 (All new papers)
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- Honohan, Patrick, 2003. "Avoiding the pitfalls in taxing financial intermediation," Policy Research Working Paper Series 3056, The World Bank.
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