Global Taxation of Agriculture and Forestry

• In Event: Consumption Tax Policy at the Border

Abstract

Across the globe, the agricultural sector is often the target of special fiscal policies. Typical rationales for subsidizing the sector (including through tax expenditures) include food security, income support for farmers, and administrability. Increasingly, the sector is also subject to sector-specific taxes aimed at curbing environmental externalities. While there is a large literature on direct agricultural subsidies, there are few cross-country studies of agricultural tax policies. To fill that gap, we therefore built a detailed inventory of over 800 tax policy measures specific to agriculture and forestry, focusing on 48 developing countries and 44 emerging and advanced economies. This database includes both tax expenditures for direct, indirect, and property taxes, as well as sector-specific taxes. We roughly estimate forgone revenue associated with the most common agricultural tax expenditures and correlate those cost estimates with measures of food insecurity and other potential policy motivations. This study complements the existing literature on agricultural subsidies and can inform research on sectoral tax reform priorities.

Authors

• Maria Coelho, International Monetary Fund

• Thornton Matheson, International Monetary Fund

• Mengxi Xie, KU Leuven

• Yomna Gaafar, IMF