ABSTRACT
This chapter discusses collection costs in rather general terms and shows that the effects on the structure of taxation of a change in the structure of collection costs. It describes the different methods of revenueraising available to the government and argues that it may at times be helpful to distinguish between those methods which directly increase government revenue and those methods which affect the allocation of resources and thus ceteris paribus alter the amount of revenue actually collected. The chapter attempts to captures the essentials of the Jamaican economy within the frame of a three-sector model in order to examine the effects on the allocation of resources of changes in various policy parameters, notably the exchange rate, the level of tariff protection and sectoral rates of taxation. The costs of collecting direct and indirect taxes are of course dependent on the rate of taxation.
