Essays coathored by Colombian and North American tax experts analyze ways to achieve long-term sustainable fiscal policy and a more efficient tax system.

Colombia, once a model of fiscal discipline for other Latin American nations, has seen its fiscal situation deteriorate since the early 1990s. Higher government spending, taxes that did not keep pace with expenditures, and severe recession led to an unsustainable debt-to-GDP ratio of 52 percent in 2002. Short-term tax increases, even coupled with spending reforms, have not restored Colombia to fiscal balance. A Colombian government commission charged with researching more long-term tax and fiscal reforms gave rise to the selected essays included in this book, each coauthored by Colombian and North American public finance experts. The analyses and recommendations have particular policy relevance for developing economies in general.The studies include both broad discussions of Colombian fiscal and tax systems and detailed analyses of such specific tax instruments as the payroll tax, value-added tax, and the bank debit tax. The focus is on three key concerns: the sustainability of Colombia's fiscal situation, possible reforms to the national tax system, and the fiscal relationship between the national and subnational governments. The theme that emerges from these studies -- the importance of moving toward a more efficient and equitable tax system while also raising revenue -- suggests the limitations of stopgap measures and the real need for long-term fiscal reform.

Richard M. Bird is professor emeritus at the University of Toronto and senior fellow of the Institute on Municipal Finance and Governance at the University of Toronto.

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James M. Poterba is Mitsui Professor in the Department of Economics at MIT. He has been Director of the NBER Public Economics Research Program since 1991 and has edited volumes 6-20 of Tax Policy and the Economy.

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Joel Slemrod is Paul W. McCracken Collegiate Professor of Business Economics and Public Policy and Professor of Economics at the University of Michigan, where he is also Director of the Office of Tax Policy Research.

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