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Revenue Buoyancy and its Fiscal Policy Implications

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Author Info
Isabelle Joumard
Christophe André ()

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Abstract

Tax receipts surged between 2005 and 2007 in many OECD countries, resulting in significant improvements in headline fiscal positions. As a consequence, pressures for tax cuts and for public spending increases have emerged. In the past, responding to such demands has permanently weakened budget positions as revenue windfalls ultimately proved to be temporary. Hence, the opportunity to address structural deficit problems and prepare for future demographic trends has been lost, and the ability to respond to subsequent cyclical downturns has been weakened. This paper provides an analysis of the factors behind recent revenue buoyancy and examines past responses to unexpected revenue gains. It also discusses whether improved information on fiscal positions and future fiscal challenges, combined with relevant fiscal rules, might help in avoiding a repetition of past errors in fiscal policy.

Dynamisme des recettes fiscales et implications de politique budgétaire
Les recettes budgétaires ont fortement progressé entre 2005 et 2007 dans de nombreux pays de l'OCDE, provoquant une nette amélioration des soldes budgétaires. Cela a généré de nouvelles demandes de réductions d?impôts ou d?accroissement des dépenses publiques. Dans le passé, les gouvernements ont fréquemment cédé à ces demandes alors que les embellies de ressources n'étaient que temporaires, entrainant une détérioration durable des soldes budgétaires. En conséquence, des opportunités de réduire les déficits structurels et de préparer les sociétés aux évolutions démographiques ont été manquées. La capacité à répondre à un retournement ultérieur de la conjoncture s?en est aussi trouvée amoindrie. Ce document fournit une analyse des facteurs sous-tendant le dynamisme récent des recettes fiscales et examine comment les gouvernements y ont répondu dans le passé. Il discute également des moyens d'éviter la répétition des erreurs de politique budgétaire passées, et notamment du rôle de règles budgétaires appropriées ainsi que d'une meilleure information sur les situations budgétaires et les défis à venir.

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Paper provided by OECD Economics Department in its series OECD Economics Department Working Papers with number 598.

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Date of creation: 10 Mar 2008
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Handle: RePEc:oec:ecoaaa:598-en

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Related research
Keywords: fiscal policy politique budgétaire fiscal rules règles budgétaires windfall tax revenues recettes fiscales exceptionnelles

Find related papers by JEL classification:
H2 - Public Economics - - Taxation, Subsidies, and Revenue
H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
H6 - Public Economics - - National Budget, Deficit, and Debt

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This page was last updated on 2008-11-17.

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