Tax obstacles to international investment

In an effort to correct temporary imbalances of payments, countries may introduce permanent fiscal measures which have the effect of inhibiting international capital movements by imposing a heavier burden of tax on both inward and outward movements of income over national borders. Although such measures may appear consistent with immediate national policies, they embody two extremely undesirable and inappropriate features: effects are not limited to new capital movements and are of far longer duration than the circumstances ordinarily require. Such measures run the risk of provoking retaliatory measures and a reversion to economic isolationism.