Why is it Important to Modernize Public Finances and Public Services?

Abstract

The need to reform public finances is a topic of discussion for decades. Recently, the demand to upgrade government management and public administration, in other words, public services, had been added to this discussion. With execution of a tax and public finance reform, competitiveness would have the chance to improve spectacularly and over the long term. There are multiple resources available to recoup budget revenues that would be lost to tax-cuts and mandatory contributions. Reforming public finances and the public sector would trigger growth, while the service providing state would significantly cut the overhead costs of public administration. Lower tax rates would also improve the willingness to pay, all of which would increase revenues. However, this appears to be an idyllic state of affairs that is far away, as even reform initiation is being postponed. The longer these reforms are postponed, the less chance remains to somewhat rapidly close the economic gap, and establish a state of equilibrium.