Possible Interaction Between the Budget and Tax Reform in Syria: An Outlook at Fiscal Democracy

The role of the public budget as a fiscal tool was greatly undermined with Syria's entry into the central planning stage in the 1960's. The distortion was compounded by deepening bureaucracy and outdated tax codes and systems. The current proposed tax reform and rehabilitation of the Syrian budget started as a result of recognition of the importance of fiscal democracy or the 'political equilibrium' of taxpayers as a method of supervising tax collection and expenditure allocation. Thus, tax reforms should be based on the following 4 principles: (1) decentralization of tax coding and expenditure allocation by enhancing the local participation of taxpayers and their representatives at the governorate levels; (2) the adoption and expansion of levied fees against publicly provided utilities in order to maximize returns to the taxpayer and improve services; (3) improving tax equity by reducing the burden of indirect taxes and greater application of income and profit taxes; and (4) promoting investment and foreign trade through reform of tariff rates and rehabilitation of the customs system. With the adoption of these principles, wholly or gradually, the sustainability of reform efforts adopted by Syria since 1991 will be assured and the economy can then reap the expected rewards.