Policy Brief - Scenarios for the Reform of Income Tax Brackets and Rates: Macroeconomic Impact and Required Policies

author: Sabri Yaaqbeh, Atef Alawneh, Rabeh Morrar, Mohanad Abu Rjailah, Misyef Jamil , Arwa Abu Hashhash, Tareq Sadeq
year: 2022

This policy paper was derived from a study prepared by the Palestine Economic Policy Research Institute (MAS) for the benefit of the Ministry of Finance (MoF) as part of the Transparency, Evidence, and Accountability (TEA) Program, implemented by the United Nations Development Program (UNDP) and funded by the Foreign, Commonwealth & Development Office (FCDO).

Direct taxes are an essential tool in revenue policies and are of great importance in financing public government expenditures to achieve economic and social goals, given their impact on consumers, producers, savings, and investment on the one hand, and on producers’ profits and activities on the other. This, in turn, is reflected in their increased tendency to undertake expansionist investments, increasing production and creating new job opportunities. Taxes are also the second direct instrument of fiscal policy after government expenditure. These two tools work in tandem to lubricate the wheels of an economy, helping to realize economic and social goals.

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