ABSTRACT
There are many ways to "fix" an inadequate tax system, and the Guatemalan government faced many choices and tradeoffs. A good reform should be well thought out and will be based on a government's priorities among economic efficiency, vertical equity, fairness, revenue targets, and tax administration. The Guatemalan Fiscal Project took the position that the government desired to increase the tax share of gross domestic product, to restructure the system to enhance the competitive position of domestic producers and exporters, and to attract new capital. Consistent with this strategy was a tax system with the lowest possible tax rates. The Guatemalan tax reform was in the comprehensive reform tradition. Most of the proposals to change the tax structure were in the direction of broadening the tax base, simplifying the system, removing tax features that led to market distortions, and minimizing the impact on low-income Guatemalans.
