nep-pbe New Economics Papers
on Public Economics
Issue of 2010‒02‒27
twelve papers chosen by
Oliver Budzinski
Philipps-University of Marburg

  1. What drives gasoline taxes?. By Dunkerley, Fay; Glazer, Amihai; Proost, Stefan
  2. A Strategic Orientation Model for the Turkish Local e-Governments By Aykut, Arslan
  3. On Properties of Royalty and Tax Regimes in Alberta's Oil Sands By Plourde, André
  4. Tax Devolution and Grant Distribution to States in India Analysis and Roadmap for Alternatives By R Mohan; Shyjan D
  5. Cross-Cultural Analysiis of European e-Government Adoption By Aykut, Arslan
  6. Britain's fiscal squeeze: the choices ahead. By Chote, R.; Crawford, R.; Emmerson, C.; Tetlow, G.
  7. Can more revenue be raised by increasing income tax rates for the very rich?. By Brewer, M.; Browne, J.
  8. Performance Informed Budgeting in Europe: The Ends Justify the Means, Don't They? By Frans Van Nispen; Johan Posseth
  9. Understanding the compliance costs of benefits and tax credits. By Bennett, F.; Brewer, M.; Shaw, J.
  10. Regulatory Governance and the Challenge of Constitutionalism By Colin Scott
  11. Revaluating the Tanzi-Model to Estimate the Underground Economy By Joras Ferwerda; Ioana Deleanu; Brigitte Unger
  12. Social income transfers and poverty alleviation in OECD countries By Caminada, Koen; Goudswaard, Kees; Koster, Ferry

  1. By: Dunkerley, Fay; Glazer, Amihai; Proost, Stefan
    Abstract: Gasoline taxes are the most important tax on car use. The question naturally arises as to what tax would be adopted by a government that responds to the preferences of the public. To address that issue, we begin with the standard Downsian model, where policy is determined by the median voter. This model predicts that as long as the median voter is not a car user, he wants high taxes on road use and a road capacity that maximizes net tax revenues. When he becomes a driver himself, he wants road user taxes that are lower and only increase to control congestion, as well as more road capacity. We then use panel data for 28 countries and find support for our theory. When the median voter becomes a driver, the gasoline tax drops on average by 20%.
    Date: 2010
  2. By: Aykut, Arslan
    Abstract: Increased environmental uncertainty and complexity along with budget constraints requires public organizations to manage strategically as never before. The environments of public organizations have become increasingly turbulent and more firmly interconnected. During the past two decades, governments have innovated new management tools such as strategic planning, outsourcing, and performance measurement to deal with complex governance and networks to provide their public services. Meanwhile, the drive to implement e-government has resulted in the formulation of many e-government visions and strategies, driven by their own sets of political, economic, and social factors and requirements. With this regard, recent developments in e-service provision of Turkish Local e-Governments deserve empirical and well-structured research. Building on the recent literature, this study draws a strategic orientation framework and tests it by analyzing the contents of strategic documents of 114 Turkish Local e-Governments.
    Keywords: Turkish Local e-Governments; e-Government Strategy; Strategic Orientation Model;
    JEL: O1 O18 H1 H7 O3
    Date: 2009–03
  3. By: Plourde, André (University of Alberta, Department of Economics)
    Abstract: Simulation models of stylized oil sands projects that include detailed representations of different royalty and tax regimes are developed. These models are then used to examine the distribution between developers and governments of net returns associated with the development and production of Alberta’s oil sands deposits. A specific focus is to assess the estimated effects on the level and distribution of net revenues associated with a number of changes in assumed revenue and expenditure conditions. The results suggest that developers, and especially surface mine operators, typically bear a greater share of the consequences of variations in capital expenditures than they do of changes in operating expenditures, prices, and exchange rates. A comparison across royalty and tax regimes suggests, among other things, that there is a positive relationship between the level of net revenues estimated to accrue to either developers or governments and the share of the consequences of changes in revenue and expenditure conditions borne by that party. Some differences in royalty and tax treatment and the distribution of the consequences of changes in revenue and expenditure conditions are noted across production technologies. It is also clear that the role of the federal government as a fiscal player in oil sands development has shrunk over time. In contrast, under the regime currently in effect, the Government of Alberta captures a higher share of net returns and typically bears a greater proportion of the consequences of changes in conditions than at any time since the introduction of an explicit oil sands royalty and tax regime in 1997.
    Keywords: oil sands; fiscal systems; risk incidence
    JEL: H25 L71 Q48
    Date: 2010–02–01
  4. By: R Mohan; Shyjan D
    Abstract: The paper attempts to analyse the impact of devolution of taxes and distribution grants by the Centre to the States in India by taking fourteen major States for the time period 1980-81 to 2006-07. The study focuses on the impact of inter- State distribution of Central grants and taxes. Analysis reveals that formula based tax devolution has been more equalising than grants. Study finds that there is need to explore alternative mechanisms. [WP 419].
    Keywords: India, vertical and horizontal inmalance, finance commission, Gross Domestic Product, GDP, state, GSDP, service tax, indirect taxes, direct, central excise, revenue, devolution, taxes, grants, centre, states, distribution, taxes, devolution,
    Date: 2010
  5. By: Aykut, Arslan
    Abstract: In terms of adoption, the topic of e-government has focused on the supply side (or government-related issues) such as strategies and policy, challenges, technical issues, evaluation of the usability of e-government Websites; however, less attention has been given to the demand (or citizen’s) perspective. Recent studies of the citizen adoption of e-government services suggest that trust, security, and transparency are the major issues for e-government adoption. The aim of this study was to explore whether cross-national differences in the adoption of e-government (Internet users who visited public authorities’ websites in last three months to obtain information, download, and file forms) are associated with differences among national cultures as described in Hofstede's model of cultural dimensions (Power Distance, Individualism, Masculinity, Uncertainty Avoidance and Long-Term Orientation).
    Keywords: e-government; e-government adoption; European e-government; European Culture; Cross-cultural difference
    JEL: H1 H11 H7 R5
    Date: 2009
  6. By: Chote, R.; Crawford, R.; Emmerson, C.; Tetlow, G.
    Abstract: The economic and financial crisis that has unfolded over the last two years has caused a dramatic deterioration in the UK's public finances, with public sector borrowing set to peak this year at a level not seen since the Second World War and public sector indebtedness set to climb to levels not seen since the late 1960s. With the next general election less than a year away, the Government and the main opposition parties alike will be under pressure to offer more detailed proposals to repair the public finances. This note discusses some of the key questions all the parties will have to grapple with.
    Date: 2009–09
  7. By: Brewer, M.; Browne, J.
    Abstract: This Briefing Note discusses how much scope there is to raise revenue from the very rich by increasing income tax rates and assesses in detail the amount of revenue that is likely to be raised by the government's proposed reforms. It extends analysis presented in the 2009 IFS Green Budget and updates some calculations in a submission to the Mirrlees Review. It also discusses information recently released by HM Treasury and HM Revenue & Customs concerning their methodology for calculating how much revenue these reforms will raise. The Briefing Note shows that there is considerable uncertainty over the revenue that could be raised from the very rich by increasing income tax rates, both because we cannot be certain about the distribution of incomes above £100,000 and because we cannot be certain how those affected will respond to the tax increase. It goes on to discuss under what conditions the measures in PBR 2008 could yield as much revenue as the Treasury is forecasting.
    Date: 2009–04
  8. By: Frans Van Nispen; Johan Posseth
    Abstract: The last few decades a revival of the performance budgeting generating a complete performance industry. Initiated by the Anglo-Saxon countries, notably New Zealand, the performance movement is widespread today. In this paper we focus on the efforts of the three European countries - Finland, the Netherlands and Spain - to link inputs to outputs and/or the results by looking at three questions: What is the rationale for budgetary reform? What is the orientation of budgetary reform: outputs or results? Is budgetary reform successful? Fiscal stress is a key driver in all cases, but not the only reason for budgetary reform. Other factors such as the Maastricht criteria for qualification and participation in the EMU have served as a trigger for budgetary reform. The approach differs from country to country, but they are all focused on the performance informed budgeting. Besides, the latest developments point in the direction of a more down to earth attitude to the expectations of budgetary reform. The success of budgetary reform hinges on the quality of performance information that is assumed a necessary but not sufficient condition for the use of performance information. All complain about the quality of performance information. Moreover, they all struggle with the link of the inputs to the outputs or results that makes us conclude, addressing the question that we raised in the subtitle of our paper, that the ends do not justify - neither moral nor empirical - the means as well as resources.
    Keywords: budget; budgetary procedure; comparative public policy; economic performance; governance; public administration
    Date: 2009–07–15
  9. By: Bennett, F.; Brewer, M.; Shaw, J.
    Abstract: This report describes a scoping study to understand more about the nature of the 'costs of compliance' that claimants of social security benefits and (personal) tax credits incur, and discusses possible ways of measuring such costs. 'Costs of compliance' refers to the costs - time, money and psychological costs - that are imposed on applicants for, and recipients of, benefits and tax credits and on others by meeting all the various requirements placed on them by social security and tax credit law and statutory authorities. Our main purpose in this report is to make the case for taking compliance costs into account in considering the impact of, and changes to, benefits and tax credits. The study aimed to investigate the extent to which the principles underlying methods of establishing 'costs of compliance' in other areas can be applied to applicants for, and recipients of, benefits and tax credits. These existing methods include valuing individuals' and companies' administrative costs of complying with the tax authorities; valuing companies' costs in complying with government regulations; and estimating the time spent by individuals in complying with government regulations of various kinds. But we also think it is important for governments to consider claimants' own perceptions and priorities in terms of the 'costs of compliance'. Currently, the government recommends that cost-benefit analysis should be used when assessing the impact of potential policy changes and it produces guidance for departments on how to put this into practice. New impact assessments have been introduced recently, which, in principle, should take into account the monetary value of all the effects of changes, including allocating a value to non-market items such as people's time. This kind of assessment should therefore include analysis of the 'costs of compliance' for benefits and tax credits claimants. In practice, however, impact assessments do not usually include such exercises. It is important to know about the scale and distribution of the compliance costs of benefits and tax credits, as well as taxes, for several reasons. Time spent by recipients fulfilling their obligations cannot be spent engaged in other activities; a more rounded measure of the productivity of the benefits and tax credits system would include such costs; and we could understand more about the reasons behind non-take-up of entitlements. There could be advantages, too, in terms of improving citizens' relationship with government. A concern about the 'burdens on citizens' imposed by their interactions with government is now moving quickly up the policy agenda in the UK, and a few attempts to measure claimants' compliance costs were initiated whilst this scoping study was being undertaken. Within the European Union, member states have also begun to exchange information and experiences about reducing burdens on citizens more generally. The Netherlands has developed both its policies and its measurement methods further than many other countries. This is a scoping study and does not set out to measure the costs of compliance incurred by benefits and tax credits claimants. Instead, it explores the nature of the costs of compliance for claimants of benefits and tax credits; assesses whether such costs can be measured and, if so, to what extent; and discusses whether impact assessments of policy changes could include such measurements. We also hope that this report will act as a catalyst for the further development of these techniques to improve policy assessment in the benefits and tax credits systems.
    Date: 2009–07
  10. By: Colin Scott
    Abstract: The late twentieth century witnessed significant shifts in the institutions and processes of governance in most members states of the OECD, as direct provision (sometimes characterised as welfare state governance) was, to some degree, displaced by the rise of the regulatory state. Changes in the nature of state intervention have been accompanied also by fundamental challenges to traditional conceptions of the centrality of the nation state as regards its dominance of key resources (notably taxation and capacities for coercion) and for the maintenance of the rule of law and democracy, as transnational and non-state power have assumed greater significance. In this paper I assess both narrow and broad versions of the challenge presented to the values of constitutionalism by regulatory governance. The narrow constitutionalist critique locates the problem of regulatory governance with the delegation of governmental power to regulatory agencies. A broader constitutionalist critique looks beyond delegation to other organs of the state, and notes that the de-centring of regulatory governance has increasingly implicated both non-state and supranational governmental bodies in regulatory tasks through implicit and explicit delegation and through the assumption of regulatory powers with little or no state involvement. I suggest that one response to the broad critique is to institutionalise broader modes of control and accountability which are best able to match the governance powers which are targeted.
    Keywords: regulation; governance; rule of law
    Date: 2010–02–15
  11. By: Joras Ferwerda; Ioana Deleanu; Brigitte Unger
    Abstract: Since the early 1980s, the interest in the nature and size of the non-measured economy (both the informal and the illegal one) was born among researchers in the US. Since then, several models to estimate the shadow and/or the underground economy appeared in the literature, each with its own theoretical pros and cons. In this paper we show that it is possible to overcome earlier expressed criticism of the Tanzi-model (1983). Its lack of a base year without any underground economy can be overcome, by using the natural experiment of the introduction of the Euro. However, this paper also comes up with new criticism. It shows that the crucial relationship of the Tanzi-model between taxes and the demand for cash money is not time robust, hence the model is not useful for estimating the underground economy nowadays. We believe that the change in financial conditions could partially explain the decline in the relevance of taxes as a means to evaluate the underground economy. We build a revised Tanzi model and try to find variables apart from tax evasion incentives in order to explain the underground economy.
    Keywords: Underground Economy Estimation, Shadow Economy, Tax Evasion
    JEL: E26 H26 K42 O17
    Date: 2010–02
  12. By: Caminada, Koen; Goudswaard, Kees; Koster, Ferry
    Abstract: Poverty alleviation is an important policy objective in developed welfare states. This paper analyzes the effect of social transfer policies on poverty. A vast literature claims that high social effort goes along with low poverty levels across countries. This paper systematically analyzes this claim. We employ several social expenditure ratios (as a proxy for social effort) and correct for the impact of the tax system and for private social arrangements, using OECD methodology. Also, we control for demographic and macro-economic differences across countries. We performed several tests with the most recent data (LIS, OECD, and SOCX) for the period 1985-2005. Our results are less clear-cut than earlier findings. We still find quite a strong negative relationship between the level of public social expenditure and poverty among 28 OECD countries. However, for non-EU15 countries this relationship is stronger than for the EU15. The results alter considerably if private social expenditures are included as well. For non-EU15 countries in our sample, we do not find evidence for a negative correlation between the level of total social spending and the incidence of poverty. In contrast, for the group of EU15 countries private social arrangements do matter as far as poverty alleviation is concerned. Demographic and macro-economic (control) variables are important as well. We developed and employed multiple linear regression models to control for these complex interrelationships. Our results point at one direction: gross social spending is the driving force as far as differences in poverty levels across countries are concerned, although the ageing of the population and unemployment rates have some explanatory power, both for non-EU15 countries and for EU15 countries. Our analyses captures another effect as well. It is essential to control for the impact of taxes on the social expenditure ratios used. By doing so, the linkage between social effort and poverty levels across countries becomes insignificant. In view of the fact that with these corrections on expenditure statistics, we have a much better – although still not perfect - measure of what governments really devote to social spending, the familiar claim that higher social expenditure goes along with lower poverty levels does not hold across the 28 examined countries examined. We believe that our comparison of the impact of several social expenditure ratios on poverty levels has emphasized that taking into account both the public/private-mix and the impact of the tax system on social expenditure ratios really matters for comparative welfare state research and for policy makers who want to reduce poverty.
    Keywords: poverty; welfare states; social transfers
    JEL: H55 H53 I32
    Date: 2010

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