The World Bank is providing a $100 million policy loan to help El Salvador improve its tax administration system, with an eye on raising the revenues needed to expand the country’s social programs.
The loan will be used to address shortcomings in El Salvador’s tax administration system in a bid to help increase fiscal revenues by up to $98 million. Activities that will be supported by the loan include efforts to improve tax collection efficiency, expand the country’s tax base, and simplify tax schemes for small and micro enterprises and wage earners.
These efforts are part of a broader two-phase program that aims to increase the country’s total tax revenues by US$368 million by 2012. The additional revenues raised will be used to support more social programs by 2012.
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