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What are the costs of a new Tax Administration? The case of a Personal Income Tax in Kuwait

Journal of Tax Administration

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Title What are the costs of a new Tax Administration? The case of a Personal Income Tax in Kuwait
 
Creator Alm, James
 
Description This paper assesses the viability of introducing a new personal income tax (PIT), focusing on the administrative costs of new tax. I first present a methodology for calculating the one-time start-up costs and the ongoing administrative costs of a new PIT. I then apply this methodology to the specific case of Kuwait. I estimate that the first-year total administrative costs of a new PIT tax administration in Kuwait range from Kuwaiti dinars (KWD) 46.8 million to KWD 90.9 million (or from USD 154.4 million to USD 300.0 million), depending on how the construction costs are financed. However, after the initial construction costs are incurred, I find that the annual total administrative costs of a PIT fall significantly to about KWD 50 million (or about USD 164 million), regardless of specific financing methods, and then rise at an annual rate of less than 6 percent per year to reach KWD 82.0 million (or USD 270.6 million) by year 2020, driven mainly by labor force growth. I also estimate that the likely revenues of a new PIT far exceed these administrative costs, even if the PIT is imposed at low rates.
 
Publisher Journal of Tax Administration
 
Contributor —
 
Date 2018-05-08
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
 
Identifier http://JoTA.website/article/view/162
 
Source Journal of Tax Administration; Vol 4, No 1 (2018)
2059-190X
 
Language eng
 
Relation http://JoTA.website/article/view/162/121
 
Rights Copyright (c) 2018 Journal of Tax Administration