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on Public Economics |
| By: | Harju, Jarkko; Kotakorpi, Kaisa; Matikka, Tuomas; Nivala, Annika |
| Abstract: | The abstract will be added on Tue 4.6.2024. |
| Keywords: | tax compliance, tax evasion, tax enforcement, firm behavior, Social security, taxation and inequality, H26, H32, H83, fi=Verotus|sv=Beskattning|en=Taxation|, |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:fer:wpaper:165&r= |
| By: | Áron Kiss; Alexander Leodolter; Alessandro Turrini; István Ványolós |
| Abstract: | Recent EU country-specific recommendations to make taxation more growth-friendly have advocated a stronger use of recurrent taxes on immovable property and a shift of the tax burden from labour income, including a reduction of the labour tax burden of low-income taxpayers. This Brief focuses on challenges related to these two types of tax reforms during periods of high inflation. The challenges linked to immovable property taxation include the update of the property values as well as issues relating to liquidity problems for households with property but relatively low income. Regarding reforms aimed at reducing the labour tax burden on low-income taxpayers, their impact may be challenged by the so-called bracket creep (or fiscal drag) phenomenon, i.e., the shift of taxpayers into higher tax brackets due to an increase of nominal incomes. The present paper highlights the relevance of these issues on the basis of recent empirical evidence and discusses current practices and possible solutions. |
| Keywords: | tax, taxation, tax policy, inflation, immovable property, housing, property value, cadastral value, property valuation, asset-rich cash-poor, liquidity, personal income tax, bracket creep, fiscal drag, indexation |
| JEL: | D1 H2 H21 H24 H3 H31 |
| Date: | 2024–03 |
| URL: | https://d.repec.org/n?u=RePEc:euf:ecobri:079&r= |
| By: | Groening, Edward; Moore, Mick; Mukama, Denis; Waiswa, Ronald |
| Abstract: | A good system for registering taxpayers is central for effective revenue collection. This is especially true for three taxes that account for the majority of revenue collected in most countries – corporate income tax, personal income tax (PIT), and value added tax. However, systems for registering taxpayers in sub-Saharan Africa are often poorly designed and managed. Summary of ICTD African Tax Administration Paper 34. |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:idq:ictduk:18362&r= |
| By: | Laurence Jacquet; Etienne Lehmann |
| Abstract: | Policies that impact the production sector, such as intermediate goods taxation (e.g. taxing robots) and trade liberalization create winners and losers. When do we need to integrate pre-distribution concerns in the design of these production policies? Should we consider the endogenous changes of factor prices in tax formulas? We show that the answers to these two questions depend only on the features of the income tax system. More precisely, can the tax system distinguish incomes from each factor of production? Can it be reformed along the so-called “GE-replicating directions”, reproducing the impact of factor price adjustments on taxpayers’ utility? If the answer to either question, or both, is “no”, the design of production policies should also take into account its pre-distributive role and all formulas reveal novel, empirically implementable “GE multipliers”. These multipliers shape tax systems to correct for market failures as well as for the effects of price adjustments. In contrast, if the answer to both questions is “yes”, it is Pareto-improving to design production policies solely to enlarge production possibilities and the “GE multipliers” shape the income tax system only to account for market failures. We illustrate these insights with realistic tax systems and practical examples of production policies. |
| Keywords: | production efficiency, nonlinear income taxation, several income sources, endogenous prices |
| JEL: | H21 H22 H23 H24 L50 F13 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11130&r= |
| By: | Laurence Jacquet; Etienne Lehmann |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:tep:teppwp:wp24-04&r= |
| By: | Spataro, Luca; Crescioli, Tommaso |
| Abstract: | This paper reviews the literature providing quantitative and empirical results on capital taxation. In doing this, we differentiate between individual and corporate taxes, respectively. From existing literature, it emerges that capital income taxes for individuals increase with the degree of heterogeneity within the population, market competition, and the economy's maturity, being negative (i.e., subsidy) in the presence of monopolistic competition or developing countries, no higher than 15% in Mirrleesian economies and as high as 45% when coupled with incomplete insurance markets and labor income taxes in competitive-closed economies. Excessively high wealth tax rates for redistributive purposes, however, are prevented by the larger tax elasticity of rich (−1.15) with respect to poor (−0.09) individuals. Negative tax elasticities concerning employment (from −0.5 to −0.2), innovation (from −2.8 to −1.3), and investments (−4.7) suggest low corporate taxes, whose magnitude should be negatively related to the degree of the economy's openness, given also the possibility for firms to relocate abroad. Finally, although still inconclusive, the main conclusions concerning dividend taxes suggest that tax rates increase with the firm's size and, thus, be set at low levels for start-ups. |
| JEL: | J1 E6 |
| Date: | 2023–09–08 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:123640&r= |
| By: | Bjørkheim, Julie Brun (Dept. of Business and Management Science, Norwegian School of Economics); Nygård, Odd E. (Research Dept., Statistics Norway) |
| Abstract: | Using the expenditure approach and administrative data on third-party reported donations, we estimate tax evasion by gender. While men are more prone to risk taking, we find no evidence of this transferring to income underreporting among the self-employed in Norway. Instead, self-employed women evade more than men. This tendency holds when controlling for sector affiliation and using household fixed effects and event study equivalents. We find that self-employed women face lower chances of penalty taxes and lighter penalties when caught, possibly due to biased predictive models, which may explain their higher evasion rates. |
| Keywords: | Tax Evasion and Avoidance; Gender; Tax Enforcement; Charity |
| JEL: | H25 H26 J16 |
| Date: | 2024–06–18 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:nhhfms:2024_008&r= |
| By: | António Afonso; José Alves; João Tovar Jalles; Sofia Monteiro |
| Abstract: | This paper explores the nuanced relationship between fiscal decentralization and fiscal sustainability. Employing panel data analyses, it scrutinizes how decentralization influences fiscal discipline across different governmental levels. Results for 185 countries show that while tax decentralization often hampers the degree of fiscal responsiveness, potentially due to misaligned local and national objectives and loss of scale efficiency, spending decentralization can enhance fiscal outcomes by promoting efficient resource allocation. These findings are contextualized within a broad range of economic and political environments, highlighting that the impacts of decentralization are contingent upon local capacities and overarching governance frameworks. Hence, we contribute to the understanding of fiscal policies’ complexity in decentralized systems and offer significant policy insights for fiscal sustainability in varied administrative contexts. |
| Keywords: | panel data analysis, fiscal sustainability, decentralization, fiscal rules, political cycles, time-varying coefficients |
| JEL: | H11 H77 H72 H73 E62 C23 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11132&r= |
| By: | Arewa, Moyo |
| Abstract: | This paper explores the potential benefits and risks to tax administrations of implementing central bank digital currencies (CBDCs), a digital version of national currencies that is gaining momentum worldwide. It outlines some of the key features of CBDCs and then considers their implications for tax administration in low- and middle-income countries (LMICs) generally. The emergence of CBDCs provides LMICs with a significant opportunity to improve financial inclusion, improve payment systems and increase tax collection. CBDCs provide greater transparency, security and traceability, which could help tax authorities track income and net worth, detect tax evasion and increase tax revenue. However, there are also complex combinations of risks associated with deploying CBDCs. The revenue authorities need to thoroughly assess how they should adapt to these challenges. Governments must also ensure that CBDCs are developed and implemented transparently, fairly and consistently with broader public policy goals. This will help maximise the potential benefits of CBDC adoption while mitigating the risks – which may be particularly significant in LMICs. |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:idq:ictduk:18361&r= |
| By: | Niesten, Hannelore |
| Abstract: | This policy brief examines the effects of cumulative, specific 7.2 per cent taxes on mobile money (MM) service providers in Côte d’Ivoire. It assesses the unique tax framework, which deviates from the consumer-centric trend observed in many African countries, where end-users typically bear the burden. Initially targeting telecom companies, the tax expanded to encompass MM providers created by licensed telecom operators (Orange Money, MTN Money, and Moov Money) and, later, all companies providing MM operations. Concerns over potential investment declines persist, yet concrete evidence is absent. The data available suggests a decrease in MM turnover, partially due to lowered MM service prices, though telecom regulator reports note a lack of communication in MM revenue reporting. If specific taxes were reduced or abolished, the funds originally allocated could be reinvested, particularly to bolster agent commissions in rural zones, given the heightened competition between diverse payment service players in Côte d’Ivoire. The study emphasises the importance of a level playing field with other money transfer services provided by banks, local businesses, and fintech. |
| Keywords: | Finance, |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:idq:ictduk:18359&r= |
| By: | Groening, Edward; Moore, Mick; Mukama, Denis; Waiswa, Ronald |
| Abstract: | Systems for registering taxpayers in sub-Saharan Africa are often poorly designed and managed. There are three characteristic problems: the process of registering new taxpayers is not sufficiently targeted on the people and businesses likely to be liable to pay tax; too many (nominal, unproductive) taxpayers are registered; and taxpayer identification (ID) details in the tax register are inaccurate. These problems interact perversely – each exacerbates the others. They will all to a large degree be solved, almost naturally, as a result of: (a) greater digitisation of tax administration generally, and (b) further interfacing between the digital systems of tax agencies and those of other (public sector) organisations, notably cross-government ID databases. But this takes time. There are significant shorter-term registration problems that need policy attention. In part they have not received it yet because these problems are rare in richer countries, which still exercise a huge influence on the tax reform agenda in Africa and other low-income regions. On the basis of recent experience in a range of African countries, we list some taxpayer registration practices that should be abandoned or used sparingly, and some that should be used more widely, to better target registration on those businesses and individuals who should be paying tax. |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:idq:ictduk:18358&r= |
| By: | António Afonso; José Carlos Coelho |
| Abstract: | We assess the drivers of fiscal sustainability in 20 OECD economies between 1950 and 2019. We find stable long-term relationships between government revenues and expenditures as well as between the primary budget balance and past public debt ratio for the full panel. Performing an expanding window analysis, we conclude that the differential between the long-term real interest rate and the real GDP growth rate (r-g) plays a crucial role in fiscal sustainability, as well as the existence of fiscal rules in terms of the budget balance, and also the output gap. The effects of inflation, external accounts balance and fiscal rules on sustainability coefficients à la Hakkio and Rush (1991) and Bohn (1998) are heterogenous. Furthermore, before the global financial crisis of 2008, the effects of the (r-g) differential were particularly strong, and depended on its sign as well as on past debt-to-GDP ratios. |
| Keywords: | fiscal sustainability, primary budget balance, public debt, panel data, expanding window, fiscal rules |
| JEL: | C23 H61 H63 E62 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11137&r= |
| By: | Jon D. Samuels; Corby Garner; Justin Harper |
| Abstract: | Taxes and subsidies drive a wedge between prices received and paid by producers and those paid by purchasers. Motivated by the large economic subsidies that were part of the policy response to the COVID-19 pandemic, this paper introduces a new treatment for taxes and subsidies into the BEA-BLS Integrated industry-level production account. Over shorter time periods, and for particular individual industries, these adjustments affect measured productivity growth, but have a minimal impact at the aggregate. Nevertheless, for shorter time periods, and for industries that receive large subsidies, accounting for the effect of taxes and subsidies has a noticeable impact on the measured sources of growth. |
| JEL: | E01 H20 D24 |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:bea:papers:0127&r= |