Fiscal Policy

The reform of a country’s (or region’s) fiscal policies should be preceded by a comprehensive study of the country’s tax system and a thorough review of its public expenditure practices. Due to the broad nature of the fiscal reform process, fiscal policy reforms often require consideration of a large number of related fiscal issues, including tax administration, budget management, intergovernmental relations and fiscal analysis. Fiscal policy reform is further complicated because the reform effort should take into account both the individual components of the fiscal system (individual taxes or expenditure programs) as well as the fiscal system as a whole.

Few organizations can match the depth and breadth of the International Studies Program in the area of fiscal policy review and reform. Since economic conditions and institutions vary from country to country, the Program’s policy experts work with stakeholders across agencies from both the executive branch as well as the legislative branch (including the Ministry of Finance, the Ministry of Economy, legislative Tax and Budget Committees, and the Tax Service) to identify each country’s unique fiscal policy dilemmas, assist in identifying reform options, and implementing the desired policy reforms.

Issues that are typically considered in the review and reform of a country’s fiscal policies include determining the desired size of the public sector; revenue sufficiency of the tax system; buoyancy of the system; horizontal and vertical equity concerns (fairness of the tax system); the possible incentives and distortions caused by the system (efficiency); administrative costs and compliance costs; and political consideration.