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Government corruption has robbed the world of $1 trillion in tax revenues

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Christian Fernsby | Monday April 15, 2019 5:29AM ET
International Monetary Fund
World   The least corrupt governments collect 4 percent of GDP more in tax revenues

A new report published by the International Monetary Fund (IMF) has estimated that government corruption has robbed the world of $1 trillion in tax revenues or 1.25 percent of global GDP.


The report, entitled Fiscal Monitor Curbing Corruption, revealed that the least corrupt governments collect 4 percent of GDP more in tax revenues than their peers with the highest levels of corruption based on an analysis of countries at similar income levels.

“Based on such cross-country comparisons, if all countries today were to reduce corruption by a similar extent, on average, as those that reduced it over the past two decades, global tax revenues could be higher by $1 trillion, or 1¼ percent of global GDP,” the IMF said.

“The gains would likely be greater considering that lower corruption would increase economic growth, further boosting revenues. Countries that managed to reduce corruption significantly were rewarded with surges in tax revenues as a share of GDP,” the Fund continued.

“Fighting corruption requires mustering political will. To ensure lasting improvements, however, it also requires developing good institutions to promote integrity and accountability throughout the public sector,” IMF said.

 

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