nep-acc New Economics Papers
on Accounting
Issue of 2005‒02‒20
four papers chosen by
Bernardo Batiz-Lazo
London South Bank University

  1. Value-Added Taxes in Developing and Transitional Countries: Lessons and Questions By Richard M. Bird
  2. Personal Security Accounts and Mandatory Annuitization in a Dynastic Framework By Luisa Fuster; Ayse Imrohoroglu; Selahattin Imrohoroglu
  3. Constraining Managers without Owners: Governance of the Not-for-Profit Enterprise By Mihir A. Desai; Robert J. Yetman
  4. VAT in Ukraine: An Interim Report By Richard M. Bird

  1. By: Richard M. Bird (International Tax Program, Rotman School of Management, University of Toronto)
    Abstract: The value-added tax has, in recent decades, become the most important single tax in most developing and transitional economies. This paper reviews some problems that have emerged as important as more experience has been gained with how VATs really work in many such countries and suggests some lines of research that need to be explored further to overcome those problems.
    Keywords: value-added tax, developing countries, transitional countries
    JEL: H25 R10
    Date: 2005–02
  2. By: Luisa Fuster; Ayse Imrohoroglu; Selahattin Imrohoroglu
    Abstract: The aging of the populations in the OECD countries has prompted various calls for reforming the existing pay-as-you-go (PAYG) pension systems. Currently, there is renewed discussion in the United States about partial privatization where a fraction of the social security payroll tax would be diverted to Personal Security Accounts. In this paper, we quantitatively evaluate the welfare effects of reforming social security by introducing a PSA with and without mandatory annuitization in an economic environment with bequests and borrowing constraints. Our setup allows us to assess whether mandatory saving or mandatory annuitization of accumulated PSA wealth at retirement is welfare enhancing, and if so, for what type of individuals. Our setup follows Fuster, Imrohoroglu, and Imrohoroglu (2003) and studies various pension schemes in a two-sided altruistic framework where social security provides insurance against individual income and lifespan uncertainty. This framework is well suited to consider the annuity role of social security for single individuals versus for households where families also provide annuity insurance to their members. Our main findings can be summarized as follows: - A majority of households prefer a PSA reform (with or without mandatory annuitization) over the current PAYG pension system. Aggregate capital, output, and consumption, as well as individuals' lifetime welfare, are higher in the reformed pension system. - Mandatory annuitization benefits most households. In light of these findings, structuring the social security reform along a two-tiered system with a safety net for low income households that do not have access to family insurance, and allowing all households to accumulate retirement wealth faster through PSAs, and finally, requiring some level of annuitization of this wealth appear welfare improving for a large fraction of households.
    JEL: E20 E60
    Date: 2005
  3. By: Mihir A. Desai; Robert J. Yetman
    Abstract: In the absence of owners, how effective are the constraints imposed by the state in promoting effective firm governance? This paper develops state-level indices of the legal and reporting rules facing not-for-profits and examines the effects of these rules on not-for-profit behavior. Stronger non-distribution constraints are associated with greater charitable expenditures and foundation payouts while more stringent reporting requirements are associated with lower insider compensation. The paper also examines how governance influences an alternative metric of not-for-profit performance %uF818 the provision of social insurance. Stronger governance measures are associated with intertemporal smoothing of resources and greater activity in response to negative economic shocks.
    JEL: L30 G30 H40 K20
    Date: 2005–02
  4. By: Richard M. Bird (Rotman School of Management, University of Toronto)
    Abstract: This paper consider some aspects of how the value-added tax (VAT) has functioned to date in Ukraine, focusing on linkages between tax design, tax administration, and the structure of the economy. Two problems that have dominated much discussion of the Ukrainian VAT in recent years ? arrears and refunds ? are closely linked to more fundamental economic and political conditions and hence cannot be resolved simply by redesigning either tax law or tax administration, although various problems do of course exist with respect to both law and administration, as developed in the paper. In addition, the equity implications of a VAT in a country like Ukraine with a large ?underground? economy are discussed, as is the recent adoption of a ?simplified? tax system that in some respects seems less likely to resolve the underlying problems than to exacerbate them. In short, while Ukraine has, under difficult circumstances, managed to implement what is in form a modern VAT in a surprisingly short time, there is still much to be done before the tax works as it should.
    Keywords: value-added tax, Ukraine
    JEL: P35 H25
    Date: 2005–02

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