nep-pbe New Economics Papers
on Public Economics
Issue of 2012‒04‒17
eight papers chosen by
Keunjae Lee
Pusan National University

  1. Taxing home ownership: distributional effects of including net imputed rent in taxable income By Francesco Figari; Alari Paulus; Holly Sutherland; Panos Tsakloglou; Gerlinde Verbist; Francesca Zantomio
  2. The effects of tax evasion and the inefficiency of the legal system on firms’ financial constraints: are they complements or substitutes?. By Germana Giombini; Désirée Teobaldelli
  3. Landfill Diversion in a Decentralized Setting: a Dynamic Assessment of Landfill Taxes By Massimiliano Mazzanti; Francesco Nicolli
  4. Charitable giving under inequality aversion and social capital. By Yamamura, Eiji
  5. Military competition and size and composition of economy and government By Teng, Jimmy
  6. Measuring Italian university efficiency: a non-parametric approach By Monaco, Luisa
  7. An Evaluation of the Revenue side as a source of fiscal consolidation in high debt economies By Banerjee, Ritwik
  8. Optimizing the size of public road contracts By Iimi, Atsushi; Benamghar, Radia

  1. By: Francesco Figari (University of Essex & University of Insubria); Alari Paulus (University of Essex); Holly Sutherland (University of Essex); Panos Tsakloglou (Athens University of Economics and Business); Gerlinde Verbist (University of Antwerp); Francesca Zantomio (Ca� Foscari University of Venice)
    Abstract: Imputed rental income of homeowners is tax exempt in most countries, despite the long-standing arguments recommending its inclusion in the tax base, on both equity and efficiency grounds. The current fiscal crisis revived interest towards this form of taxation. The paper investigates the fiscal and distributional consequences of including homeowners� imputed rent, net of mortgage interest and maintenance costs, in taxable income as any cash income source that extends consumption opportunities. Three scenarios are analysed in six European countries: in the first imputed rent is included in the taxable income of homeowners, while at the same time existing mortgage interest tax relief schemes and taxation of cadastral incomes are abolished. In two further revenue-neutral scenarios, the additional tax revenue raised through the taxation of imputed rent is redistributed to taxpayers, either through a proportional rebate or a lump-sum tax credit. Results show how including net imputed rent in the tax base might affect inequality in each of the countries considered. Housing taxation appears to be a promising avenue for raising additional revenues, or lightening taxation of labour, with no inequality-increasing side-effects.
    Keywords: Housing taxation; imputed rent; income distribution; inequality; microsimulation
    JEL: D31 H23 I31 I32
    Date: 2012–04–08
  2. By: Germana Giombini (Department of Economics, Society & Politics, Università di Urbino "Carlo Bo"); Désirée Teobaldelli (Department of Law, Università di Urbino "Carlo Bo")
    Abstract: This paper analyzes the joint impact of tax evasion and the inefficiency of the legal system on firms’ financial constraints. We find that both variables have a statistically significant effect on the difficulties that firms encounter when trying to access financing and this effect is nonlinear. In particular, tax evasion and the inefficiency of the legal system are substitute as they mitigate each other’s effects on firms’ credit constraints. It means that the negative impact of tax evasion on financial constraints faced by firms decreases in the presence of a lower efficiency of the legal system.
    Keywords: Financial constraints, Tax evasion, Legal system efficiency.
    JEL: D2 G3 H26 K4
    Date: 2012
  3. By: Massimiliano Mazzanti; Francesco Nicolli
    Abstract: We analyse the process of landfill diversion and separated collection, two pillars of a waste related performance in a country, by embedding the dynamics in a frame where economic, geographical and policy variables enter the arena. We aim at investigating in depth what main drivers may be responsible for such a phenomenon. In addition to structural and economic drivers we primarily investigate the role of landfill taxes. Notwithstanding the Italian landfill tax dates back to 1996, there is a lack of effectiveness assessment, which primarily derives from the absence of a full coherent dataset covering all regions. In fact, the implementation is delegated to each region, a case study of real decentralisation, and the opposite for example of the UK situation, where the tax is set and administered by the Treasury. We first provide a descriptive analysis of the regional trends over the years on the basis of an original landfill tax dataset covering all Italy that we constructed through a scrutiny of regional bills, and web and telephone contacts. We exploit this peculiar and original aggregation of tax related information to test whether the tax has been effective in supporting landfill diversion. We test the hypothesis on the basis of an integrated dataset that merges economic, waste, policy variables together, at regional level and over the period 1999-2008. We check for results sensitivity the effect of the landfill regional tax by using provincial dataset over the same period. Panel regressions show that the effect of tax is significant, complementary to structural factors, population density and related opportunity cost among others. Spatial effects seem instead negligible. This is the first evidence on a large panel dataset that introducing and increasing landfill taxes over time is an effective way to cope with waste disposal. Regions that have increased such taxes over time have achieved better waste disposal performances. Landfill taxes are not the only instrument but they show to a relevant ‘must have’ in the policy package.
    Keywords: Landfill Taxes; Landfill Diversion; Recycling; Decentralized Policy; Regional Performance
    JEL: C23 Q38 Q56
    Date: 2012–04–10
  4. By: Yamamura, Eiji
    Abstract: A Japanese General Social Survey is used to re-examine how voluntary giving is associated with inequality aversion, and how the relationship differs between high- and low-income groups. This paper also investigates how social capital influences that relationship. The key findings are that (1) the level of voluntary giving increases with inequality aversion for high-income groups, but not for low-income groups, and (2) social capital accumulated in the respondent’s residential area reinforces the positive influence of inequality aversion on voluntary giving for high-income groups only.
    Keywords: Inequality aversion; charitable contribution; trust; private provision of public goods
    JEL: D63 H41 Z13
    Date: 2012–04–05
  5. By: Teng, Jimmy
    Abstract: This paper uses a formal model to analyze the effects of military competition between states on the size and composition of the economy and the government. Great economies of scale in warfare and even distributions of military capability among the contestants generate intense interstate rivalry, strong concern for relative economic and military capability. Consequently, there is a larger economy and government and an increasing share of the military in the economy. However, if there are diseconomies of scale in the provision of public intermediate inputs, intense military competition between states actually increases the relative size of the civilian public sector relative to that of the military. The paper then studies how waves of military technological revolutions affected military competition between states and the size and composition of economy and government in history.
    Keywords: Growth of Government; Public Intermediate Inputs; Civilianization; Economic Performance; Military Technological Revolutions
    JEL: H11 H56 N40
    Date: 2012–01–05
  6. By: Monaco, Luisa
    Abstract: This work analyses the performance of Italian universities taking into account technical efficiency. The study provides an assessment of levels of technical efficiency taking into account also environmental factors. We focus on the relationship between levels of technical efficiency and university students dropouts. The efficiency analysis, using Data Envelopment Analysis, w.r.t. the 2009/10 academic year, shows that universities belonging to the private sector have higher efficiency scores than public owned universities. Moreover, a difference arises on a geographical basis where centre-northern universities are generally more efficient than southern ones.
    Keywords: Technical efficiency – DEA – Second stage analysis; Technical efficiency – DEA – Second stage analysis JEL Classification:
    JEL: C14 I23 I21
    Date: 2011–12–10
  7. By: Banerjee, Ritwik
    Abstract: Unsustainable levels of debt for some European economies is causing enormous strain in the Euro area. How to tide over the debt crisis seems to be the most important objective the European policy makers are currently facing. We use a dynamic general equilibrium closed economy model to compute the dynamic Laffer Curves for Portugal, Ireland, Greece and Spain for different class of taxes. We conclude that there exists scope for considerable revenue generation by raising certain class of taxes. Thus revenue generation, along with fiscal consolidation holds key for debt reduction.
    Keywords: fiscal consolidation; dynamic laffer curve; tax revenue; fiscal policy
    JEL: E62 E61 O52
    Date: 2012–04–07
  8. By: Iimi, Atsushi; Benamghar, Radia
    Abstract: Procurement packaging has important effects on not only the bidders'bidding behavior, but also contractors'performance. By changing the size of public contracts, procurers can encourage (or discourage) market competition and improve contract performance, avoiding unnecessary cost overruns and project delays. In practice, there is no single solution about how to package public contracts. With procurement data from road projects in Nepal, this paper examines the optimal size of road contracts in rural areas. The optimum varies depending on policy objectives. To maximize the bidder participation, the length of road should be about 11 kilometers. To minimize cost overruns and delays, the contracts should be much larger at 17 and 21 kilometers, respectively. Compared with the current procurement practices, the findings suggest that procurers take more advantage of enlarging road packages, although contracts that are too large may increase the risk of discouraging firms from participating in public tenders.
    Keywords: Government Procurement,Transport Economics Policy&Planning,Debt Markets,Post Conflict Reconstruction,Contract Law
    Date: 2012–04–01

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