nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2012‒05‒15
nine papers chosen by
Alexander Harin
Modern University for the Humanities

  1. Reducing Reliance on Natural Resource Revenue and Increasing Subnational Tax Autonomy in Bolivia By Giorgio Brosio
  2. Tax Avoidance, Human Capital Accumulation and Economic Growth By María Jesús Freire-Serén; Judith Panadés i Martí
  3. Determining a Consistent Set of Accounting and Financial Reporting Standards By Anne Le Manh-Béna; Olivier Ramond
  4. Sub-National Revenue Mobilization in Latin American and Caribbean Countries: The Case of Argentina By Daniel Artana; Sebastian Auguste; Marcela Cristini; Cynthia Moskovitz; Ivana Templado
  5. Tax Competition and Income Inequality: Why did the Welfare State Surviv By Troeger, Vera; Plumper, Thomas
  6. Optimal income taxation with asset accumulation By Abraham, Arpad; Koehne, Sebastian; Pavoni, Nicola
  7. Why do we Redistribute so Much but Tag so Little? The principle of equal sacrifice and optimal taxation By Matthew C. Weinzierl
  8. Improving the targeting of zero-rated basic foodstuffs under value added tax (VAT) in South Africa - An exploratory analysis By Ada Jansen; Elizabeth Stoltz; Derek Yu
  9. A Corporate governance index for large listed companies in India By Jayati Sarkar; Subrata Sarkar; Kaustav Sen

  1. By: Giorgio Brosio
    Abstract: This paper address options for restructuring the revenue system of Bolivia’s subnational governments, particularly prefectures, emphasizing reduction of dependence on natural resources and strengthening of subnational tax autonomy. The paper additionally identifies tax instruments or tax bases that could be assigned exclusively to regional governments or shared with the central government, assessing their main advantages and disadvantages through a simulation of revenue generation. The results show that several options exist for increasing the tax autonomy of local governments. The tax instruments proposed in this paper carry relatively low administrative costs. In fact, the taxes proposed would not require the establishment of new agencies but could be collected by existing agencies and, in the case of energy and fuel taxes, by producing and distributing firms.
    JEL: H21 H23 H24 H25 H26 H71
    Date: 2012–04
  2. By: María Jesús Freire-Serén; Judith Panadés i Martí
    Abstract: Human capital accumulation may negatively affect economic growth by increasing tax avoidance and reducing effective tax rates and productive public investment. This paper analyzes how the endogenous feedback between human capital accumulation and tax avoidance affects economic growth and macroeconomic dynamics. Our findings show that this interaction produces remarkable growth and welfare effects.
    Keywords: tax avoidance, tax non-compliance, Economic growth
    JEL: E62 H26 O30 O40 O41
    Date: 2011–12
  3. By: Anne Le Manh-Béna (ESCP Europe - ESCP Europe); Olivier Ramond (DRM - Dauphine Recherches en Management - CNRS : UMR7088 - Université Paris IX - Paris Dauphine)
    Abstract: Following the debate on the Conceptual Framework revision undertaken by the IASB and the FASB, this paper discusses three major concerns about the way financial reporting standards should be determined: (1) What is the role a Conceptual Framework?; (2) For whom and for which needs are accounting and financial reporting standards made?; and (3) What information set should financial reporting provide? We show that the perceived need of a Framework has resulted in practice in weak usefulness We note that arguments used in the IASB-FASB new Framework to justify the focus on the needs of capital providers are questionable and so is the hypothesis according to which the content of these financial statements should aim at providing useful information in making decisions about allocation of resources.
    Keywords: Conceptual Framework, IASB, Financial Reporting Objectives, Users
    Date: 2011–05–10
  4. By: Daniel Artana; Sebastian Auguste; Marcela Cristini; Cynthia Moskovitz; Ivana Templado
    Abstract: This paper analyzes sub-national revenues in Argentina. Following a discussion of the recent evolution of government revenues and their vertical imbalance, the paper then analyzes the most important taxes collected by federal, provincial and local governments. Subsequently considered are the determinants of sub-national revenues and the impact of the 2001-2002 crisis. It is found that automatic transfers improve collections of the cascade sales tax and the property tax by enlarging the disposable income of the private and public sector of the provinces favored by the regional redistribution of income, while discretionary transfers reduce own-source revenue effort and encourage public investment. The paper concludes by analyzing options to improve sub-national revenue mobilization and offering specific proposals, particularly in regard to improving the cascade provincial sales tax.
    JEL: H71 H77
    Date: 2012–03
  5. By: Troeger, Vera (University of Warwick); Plumper, Thomas (University of Essex)
    Abstract: Contrary to the belief of many, tax competition did not undermine the foundations of the welfare state and did not even abolish the taxation of capital. Instead, tax competition caused governments to shift the tax burden from capital to labor, thereby increasing income inequality in liberal market economies that traditionally redistribute income by relatively high effective capital taxes and relatively low effective labor taxes. In contrast, income inequality did increase little or not at all in social welfare states that dominantly use social security transfers to redistribute income. Governments in social welfare states found it easy to maintain high social expenditures because they increasingly taxed labor, which is relatively immobile, to finance social security transfers. We test the predictions of this theory using a simultaneous equation approach that accounts for the endogeneity of tax policies, fiscal policies, and deficits.
    Date: 2012
  6. By: Abraham, Arpad; Koehne, Sebastian; Pavoni, Nicola
    Abstract: Several frictions restrict the government's ability to tax assets. First of all, it is very costly to monitor trades on international asset markets. Moreover, agents can resort to non-observable low-return assets such as cash, gold or foreign currencies if taxes on observable assets become too high. This paper shows that limitations in asset observability have important consequences for the taxation of labor income. Using a dynamic moral hazard model of social insurance, we …find that optimal labor income taxes typically become less progressive when assets are imperfectly observed. We evaluate the effect quantitatively in a model calibrated to U.S. data.
    Keywords: Optimal Income Taxation; Capital Taxation; Asset Accumulation; Progressivity
    JEL: H21 D82 E21
    Date: 2012–05–03
  7. By: Matthew C. Weinzierl
    Abstract: Tagging is a free lunch in conventional optimal tax theory because it eases the classic tradeoff between efficiency and equality. But tagging is used in only limited ways in tax policy. I propose one explanation: conventional optimal tax theory has yet to capture the diversity of normative principles with which society evaluates taxes. I generalize the conventional model to incorporate multiple normative frameworks. I then show that if the principle of equal sacrifice--a classic, comprehensive criterion of fair taxation proposed by John Stuart Mill and associated with the Libertarian normative framework--is given some weight in the social objective function, tagging generates costs that must be weighed against the benefits it generates through conventional channels. Only tags that are sufficiently predictive of ability, such as disability status, will be used. Calibrated simulations using micro data from the United States show that optimal policy may simultaneously include substantial redistribution across income-earning abilities, as in the standard model, and reject three prominently-proposed tags--gender, race, and height--as in actual policy. This explanation for limited tagging also implies that optimal marginal tax rates at high incomes are lower than in standard analysis and closer to those observed in policy.
    JEL: D63 H2 H21
    Date: 2012–05
  8. By: Ada Jansen (Department of Economics, University of Stellenbosch); Elizabeth Stoltz (Department of Economics, University of the Western Cape); Derek Yu (Department of Economics, University of Western Cape)
    Abstract: VAT without any exemptions or zero-rating is regressive. Since the inception of VAT in South Africa, there has been an ongoing debate around the issue of zero-rating to alleviate the burden on poor households. This paper uses vegetables as an example and conducts tax incidence analyses to compare the relative burden of VAT on vegetables for various income groups. It finds that differential treatment of the zero-rating of VAT on various categories of vegetables could be beneficial in terms of relative equity gains. It is suggested frozen vegetables remains zero-rated, whereas canned vegetables and some fresh vegetables items be zero-rated.
    Keywords: Value added tax, expenditure patterns, regressivity, zero-rating, equity gain, optimal targeting, basic foodstuffs, sub-categories of vegetables, South Africa
    JEL: H2 H24
    Date: 2012
  9. By: Jayati Sarkar (Indira Gandhi Institute of Development Research); Subrata Sarkar (Indira Gandhi Institute of Development Research); Kaustav Sen (Indian Institute of Management)
    Abstract: We construct a Corporate Governance Index for 500 large listed Indian firms for the period from 2003 to 2008 in this paper. The index construction uses information on four important corporate governance mechanisms: the board of directors, the ownership structure, the audit committee, and the external auditor. The construction of the index for six years allows an examination of the evolution of corporate governance in India in a period when there have been a large number of corporate governance reforms. The analysis documents a rising trend in the level of the Corporate Governance Index of Indian companies. There is a strong association between the Corporate Governance Index and the market performance of companies, where companies with better corporate governance structures earn substantially higher rates of return in the market. This analysis shows that Indian markets tend to reward companies that carry out governance reforms. It provides an impetus to regulators as well as to push for further reforms.
    Keywords: Corporate Governance Index, board of directors, ownership structure, audit committee, external auditors
    JEL: C43 G18 G34 M41 M42
    Date: 2012–03

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