Tax Reform Options for the RMI and Estimation of Fiscal and Economic Impact

Tax Reform Options for the RMI and Estimation of Fiscal and Economic Impact

<span style="font-size:11.0pt"><span style="font-family:&quot;Calibri&quot;,sans-serif">This Policy Note explores comprehensive tax reform strategies for the Republic of the Marshall Islands (RMI), aiming to modernize its outdated tax system. The RMI is currently benefiting from strong economic performance and favorable financial outcomes from Compact negotiations, and is therefore in an ideal position to implement these reforms. The Note highlights the introduction of a modern tax regime that replaces existing taxes with a broad-based consumption tax and a business profits tax, promoting fiscal revenue neutrality while enhancing efficiency and equity in the tax system. These reforms are aligned with the RMI government&#39;s social policies, such as increasing the minimum wage and introducing Universal Basic Income, which are intended to improve the financial wellbeing of lower-income households. Finally, a new tool, the Tax Reform Impact Calculator (TRIC), is introduced to assist policymakers in estimating the fiscal impacts of various tax scenarios, and to facilitate informed decision-making and stakeholder engagement.</span></span>

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https://pitiviti.org/storage/dm/2024/05/rmi-tax-reform-paper-5-20240510011033193.pdf