Taxation patterns in small island states

Abstract

Small island states have particular characteristics in terms of taxation. They tend to have a very open economy, and a relatively large government owing to the fact that certain functions cannot be downscaled in proportion to the population. The design of sensible tax policies for small economies requires that careful attention be paid to their international ramifications, i.e. their openness. This is a potentially daunting prospect, since the analysis of tax design in small open economies entails all of the complications and intricacies that appear in larger economies, with the addition of many others, given their high dependence on exports and imports.