nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2009‒07‒17
ten papers chosen by
Alexander Harin
Modern University for the Humanities

  1. Asset Liability Management for Banks By Giandomenico, Rossano
  2. Tax Policy in Pakistan: An Assessment of Major Taxes and Options for Reform By Wayne Thirsk
  3. Pakistan’s Tax Gap: Estimates By Tax Calculation and Methodology By Robina Ather Ahmed; Mark Rider
  4. Assessing Enterprise Taxation and the Investment Climate in Pakistan By James Alm; Mir Ahmad Khan
  5. Pakistan – A Globalized Tax World: An Analysis of Its International Tax Practice By Geerten M. M. Michielse
  6. The BBLR Approach to tax Reform in Emerging Countries By Richard M. Bird
  7. Strategic tax collection and fiscal decentralization: the case of Russia By Alexander Libman; Lars P. Feld
  8. Pakistan: Comprehensive Individual Tax Reform: Round 2 By Sally Wallace; Harini Kannan
  9. CAN WE TAX THE DESIRE FOR TAX EVASION? By Ratbek Dzhumashev; Emin Gahramanov

  1. By: Giandomenico, Rossano
    Abstract: The model, by using a contingent claim approach, determines the fair value of the banks liabilities accounting for the protection and the surrender possibility. Furthermore, it determines the implied duration of banks liabilities so to show that the surrender possibility will reduce the effective duration of banks liabilities. Implications for the immunization are also treated.
    Keywords: Contingent Claim; Duration
    JEL: G13 G21
    Date: 2008–07–05
  2. By: Wayne Thirsk (Andrew Young School of Policy Studies, Georgia State University)
    Abstract: This paper undertakes a critical evaluation of the strengths and weaknesses of all of Pakistan’s major sources of tax revenue: the individual income tax, the corporate income tax, the sales tax, excise taxes and trade taxes on imports. For each major tax it describes the nature of the current tax base and the rate or rate structure that is applied to that base. After that exercise the paper identifies certain features of each tax that raise significant concerns for tax policy and constitute the beginning of an agenda for future tax reform. In each case the tax policy issues that have been flagged are discussed within a policy framework that appeals to the broadly accepted norms of “good” taxation and international experience in grappling with these issues. The concluding section of this paper sets forth for consideration an array of tax reform proposals that attempt to address the most important flaws and problems that have been detected in Pakistan’s tax system.
    Keywords: Pakistan, Pakistan Taxation, fiscal decentralization, revenue mobolization, sources of tax revenue
    Date: 2008–12–01
  3. By: Robina Ather Ahmed; Mark Rider (Andrew Young School of Policy Studies, Georgia State University)
    Abstract: This report provides estimates of Pakistan’s tax gap by type of tax and describes the methodologies and data used to produce these estimates. A country’s tax gap is the amount of tax that goes uncollected due to non-compliance with the tax law. For estimation purposes, the operational definition of the tax gap is the difference between potential and actual federal tax revenue, where potential revenue is the amount of tax that the government would collect if everyone fully complied with the tax law. It is a simple matter to get actual tax collections by type of tax, so the trick to estimating a country’s tax gap is to obtain a reasonably accurate measure of potential tax revenue. Our basic strategy is to use micro-simulation models to estimate the potential revenues from Pakistan’s federal taxes of which there are only a hand full. Such modeling requires micro-economic data with information about the relevant tax bases and a tax calculator to simulate tax liabilities by type of tax. The advantage of this approach is the detailed information that it provides on the rate of compliance by type of tax which should be helpful in targeting scarce tax enforcement resources and in evaluating tax policy reforms.
    Keywords: Pakistan, Pakistan Taxation, tax gap, non-compliance
    Date: 2008–12–01
  4. By: James Alm (Andrew Young School of Policy Studies, Georgia State University); Mir Ahmad Khan
    Abstract: The Pakistan system of taxing enterprises has undergone some major changes in recent years. Nevertheless, the corporate tax system remains plagued by a number of problems. The existence of numerous exemption programs has significantly reduced tax revenues, and has greatly distorted the allocation of investment across sectors and asset types. There also seems to exist significant amounts of tax evasion, evasion that also distorts resource allocation, reduces tax revenues, and compromises the distributional objectives of the system. In part as a result of tax avoidance and tax evasion, the tax base has shrunk over time, further reducing revenues and leaving the more visible taxpayers still out of the tax net. The extensive use of tax incentives is seldom tracked, quantified, and evaluated, and the intended effects on economic growth are uncertain. The incentives are only one feature of the tax system that contributes to an overly complicated system, complications that illustrate the limitations of the tax administration. The tax system was designed for times and circumstances that are long past, and the system has evolved over time in a piecemeal, ad hoc manner with little apparent thought given to the ways in which the pieces of the system need to fit together.
    Keywords: Pakistan, Pakistan Taxation, Pakistan system of taxing enterprises, tax avoidance, tax evasion
    Date: 2008–12–01
  5. By: Geerten M. M. Michielse
    Abstract: The Government of Pakistan is considering an extensive tax and administrative reform by 2009 and asked the World Bank to provide a discussion paper on several technical issues. This report is dealing with the international aspects of the tax system: (a) the double tax agreements, and (b) the trade agreements.
    Keywords: Pakistan, Pakistan Taxation, tax agreements, trade agreements
    Date: 2008–12–01
  6. By: Richard M. Bird (International Studies Program. Andrew Young School of Policy Studies, Georgia State University)
    Abstract: Fiscal experts have years proposed a holy trinity of tax reform options for developing countries: broader bases, lower rates, and better administration. The review in this paper of fifty years of experience auggests that what might be called the BBLR approach-- broader bases and lower rates -- to tax structure reform holds up fairly well. Nonetheless, some qualifications to the basic BBLR approach are suggested and the continuing fundamental importance of understanding and improving tax administration is stressed.
    Keywords: tax reform, tax bases, tax rates, tax administration
    Date: 2008–12–01
  7. By: Alexander Libman (University of Mannheim); Lars P. Feld (University of Heidelberg)
    Abstract: In a centralized federation, where tax rates and taxation rules are set by the federal government, manipulating the thoroughness of tax auditing and the effectiveness of tax collection could be attractive for regional authorities because of a variety of reasons. These range from tax competition to principal-agent problems, state capture and benefits of fiscal equalization. In this paper we discuss strategic tax auditing and collection from the perspective of fiscal federalism and test for strategic tax collection empirically using data of the Russian Federation. Russia’s regional authorities in the 1990s have always been suspect of tax auditing manipulations in their favor. However, in the 2000s increasing bargaining po¬wer of the centre seems to induce tax collection bodies in the regions to manipulate tax auditing in favor of the federal centre. Our findings confirm the existence of strategic tax collection for the Yeltsin period after exclusion of outliers; the results for the Putin period are however rather ambiguous.
    Keywords: fiscal federalism, tax arrears, transition economies
    JEL: H26 H77
    Date: 2009
  8. By: Sally Wallace (Andrew Young School of Policy Studies, Georgia State University); Harini Kannan
    Abstract: The fundamental proposal for comprehensive individual income tax reform in Pakistan is to provide an integrated income tax structure that pertains to income of all individuals (including non-incorporated businesses) and which otherwise dramatically simplifies the taxation of individual income in Pakistan. An integrated individual income tax would treat individuals (salaried employees, self-employed businesses, and other non-corporate entities) in a similar way by applying a given tax rate structure to taxable income.
    Keywords: Pakistan, Pakistan taxation, individual income tax, income tax
    Date: 2008–12–01
  9. By: Ratbek Dzhumashev; Emin Gahramanov
    Abstract: A static income tax evasion model à la Yitzhaki (1974) predicts that an increase in the tax rate causes taxpayers to increase their income declaration. In an important contribution, Lin and Yang (2001) obtained exactly the opposite result by extending the Yitzhaki (1974) model to a dynamic one with Ak(t) production technology. In this paper we show that once the Lin and Yang (2001) model becomes fully compatible with the Yitzhaki’s (1974) setting, the negative relationship between taxes and evasion still prevails. We then enrich the dynamic model with a productive public sector, and obtain an ambiguous relationship between taxes and evasion incentives as in Allingham and Sandmo (1972). We also prove that the growth-maximizing share of public expenditures in total output satisfies the natural efficiency condition even in the presence of tax evasion. However, the latter result is not robust to the introduction of the costs associated with income declaration and concealment activities.
    Keywords: Tax Evasion, Optimal Taxation, Economic Growth
    JEL: H26 H21 D91
    Date: 2009–06
  10. By: Tuck Cheong Tang; Dietrich Fausten
    Abstract: This study uses two alternative specifications to test the interdependence between the current and capital accounts of the balance of payments. The empirical specifications, derived from the balance of payments constraint and from national income accounting relationships, respectively, yield consistent support for the interdependence hypothesis. The balance of payments specification returns positive findings for nine of the ten sample countries. These are corroborated by the general equilibrium specification in three instances. Neglect of the comprehensive lag structure of the underlying model may account for the relatively weak support from the general equilibrium specification of the interdependence hypothesis.
    Keywords: Current account; Capital account; Developing countries; G-5; Interdependence
    JEL: F32
    Date: 2009–06

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