The structure of government revenues changed distinctly as a consequence of the tax and tariff revisions of 1986. Haiti's taxes and tariffs historically exacted revenues from directly productive activities--mainly agriculture--and from international trade. This revenue structure eventually created disincentives for the production of cash crops and other export products, while it stimulated the development of uncompetitive industries. Over time, Haiti's authorities created a public-finance pattern that, when combined with a highly regressive income tax, raised approximately 85 percent of its revenue from the rural population, but spent only about 20 percent on those same taxpayers.

A 10 percent value-added tax was introduced in 1983, but it was not until 1986 that tax and tariff reforms began to shift the source of revenues. New tax laws simplified the income-tax process, altered tax brackets, and strengthened tax-collection efforts. In the area of trade regulations, the new government phased out export taxes and replaced quantitative restrictions on all but five goods with ad valorem tariffs of a maximum of 40 percent, thus essentially lowering import protection and liberalizing trade. As a result of these policies, revenues derived from international trade dropped from 35 percent in FY 1984 to an estimated 22 percent in FY 1989 the revenue balance in both years was derived from internal taxes.

Data as of December 1989