Bank Debit Taxes in Latin America: An Analysis of Recent Trends

IMF Working Papers, May 1, 2001

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Bank Debit Taxes in Latin America: An Analysis of Recent Trends

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Bibliographic details

• Authors: Isaias Coelho, Victoria J Perry, Liam P. Ebrill
• Published: May 1, 2001
• Series: IMF Working Papers
• DOI: https://doi.org/10.5089/9781451848908.001

Summary

• Six Latin American countries have levied taxes on withdrawals from bank accounts.
• The taxes have been viewed as a convenient tax handle during a difficult fiscal period.
• The paper reviews arguments for and against bank-debit-type taxation, describes the taxes, and surveys their revenue performance and economic impact.
• Conclusion: the recently implemented taxes have been successful in raising revenue in the short term, but adverse allocational impacts have likely been significant.
• Suggested contextual factors for effectiveness: the tax may work better in times of fiscal crisis, when financial intermediation is deep, and when the tax rate is modest.

Findings on revenue performance

• Recently implemented bank-debit taxes have been successful in raising revenue in the short term.
• Short-term revenue success is emphasized as a central empirical finding.

Economic impact and allocational effects

• The paper identifies likely significant adverse allocational impacts from bank-debit taxes.
• The adverse effects on allocation are highlighted as a key cost offsetting short-term revenue gains.

Conditions influencing effectiveness

• The tax may work better when:
  • There is a fiscal crisis.
  • Financial intermediation is deep.
  • The tax rate is modest.

Subject areas and keywords

• Subject: Bank levy, Financial markets, Financial transaction tax, Income and capital gains taxes, Revenue administration, Stock markets, Taxes
• Keywords: Argentina, Argentinean tax, bank, bank debit tax, bank debit taxes, bank debit type tax, Bank levy, Brazil, case of bank debit tax, Colombia, debit, debit tax, debit taxes in Latin America, distorting tax, Ecuador, Ecuadorian tax, Europe, Financial transaction tax, Financial transactions taxes, Income and capital gains taxes, Peru, Stock markets, tax, tax enforcement, tax measure, transaction, turnover taxes cascade, type tax, Venezuela, WP

Content in this bundle

• Bank Debit Taxes in Latin America: An Analysis of Recent Trends - WP/01/67
  • Bank Debit Taxes in Latin America: An Analysis of Recent Trends - WP/01/67 (Markdown version)
  • Bank Debit Taxes in Latin America: An Analysis of Recent Trends - WP/01/67 (PDF)