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on Public Economics |
| By: | Glenn P. Jenkins (Department of Economics Queen’s University, Canada, and Cambridge Resource International Inc.); Mikhail Miklyaev (Department of Economics Queen’s University, Canada, and Cambridge Resource International Inc.); Amin Sokhanvar (Cambridge Resources International Inc.) |
| Abstract: | This document provides a comprehensive analysis of tax incentives in Madagascar, offering policy recommendations to enhance efficiency, revenue generation, and economic growth. It examines key tax components, including excise taxes, the Value-Added Tax (VAT), trade taxes, and corporate tax incentives, identifying inefficiencies and proposing reforms to streamline administration and improve fiscal outcomes. The report highlights the need to simplify Madagascar’s excise tax system by narrowing the taxable goods range, reducing compliance costs, and improving public welfare. It also addresses VAT inefficiencies, noting that the country’s 359 exemptions undermine revenue potential and complicate tax administration. Recommendations include reducing unnecessary exemptions and enhancing compliance to boost fiscal sustainability. In trade taxation, the document advocates for optimizing import tariffs by eliminating excessive exemptions, thereby strengthening industrial growth and export competitiveness. Corporate tax incentives are assessed through Cost-Benefit Analysis (CBA) to ensure they generate genuine investment expansion and economic benefits. Additionally, the report emphasizes prioritizing public sector investments for climate resilience over private sector tax incentives, advocating for international support to address climate challenges effectively. By streamlining tax policies and aligning them with economic and social objectives, Madagascar can enhance revenue collection, promote sustainable investment, and strengthen climate resilience. These reforms will contribute to a more efficient, equitable, and growth-oriented tax system, supporting the country’s long-term development goals. |
| Keywords: | Excise Taxes, Impact Analysis, Tax Incentives, Corporate Income Tax (CIT), Revenue Tax Administration, Tax Exemptions, Economic Efficiency, Value-Added Tax (VAT) |
| JEL: | H2 H21 H23 F13 |
| Date: | 2025–02–05 |
| URL: | https://d.repec.org/n?u=RePEc:qed:dpaper:4627 |
| By: | Glenn P. Jenkins (Department of Economics Queen’s University, Canada, and Cambridge Resource International Inc.); Owotomiwa C. Olubamiro (Cambridge Resources International Inc.); Mikhail Miklyaev (Department of Economics Queen’s University, Canada, and Cambridge Resource International Inc.); Amin Sokhanvar (Cambridge Resources International Inc.) |
| Abstract: | Tax incentives are widely used to attract investment and stimulate economic growth, but they also pose challenges related to revenue loss, tax compliance, and administrative efficiency. This report provides a structured framework for evaluating tax incentives in Madagascar, assessing their fiscal and economic impacts while ensuring alignment with the country’s development objectives. The report introduces methodologies for analyzing tax expenditures across different tax categories, including corporate income tax (CIT), value-added tax (VAT), excise taxes, and trade taxes. It emphasizes the importance of cost-benefit analysis (CBA) to determine whether tax incentives generate sufficient economic benefits to justify their fiscal costs. Additionally, the report discusses the role of stakeholder analysis in understanding how different tax measures affect businesses, government revenue, and public welfare. This report explores the risks associated with tax incentives, such as potential revenue leakages, compliance challenges, and the administrative burden on tax authorities. It highlights best practices for monitoring and evaluating tax policies to improve transparency and accountability. The findings of this study provide policymakers with essential guidelines for designing effective and sustainable tax incentives. By adopting a rigorous evaluation approach, Madagascar can enhance its tax policy framework, ensuring that incentives contribute to long-term economic growth without undermining public finances. |
| Keywords: | Cost-Benefit Analysis (CBA), Corporate Income Tax (CIT), Fiscal Policy, Tax Incentives, Tax Expenditure Analysis |
| JEL: | H2 H3 H4 H5 O2 O5 |
| Date: | 2025–02–05 |
| URL: | https://d.repec.org/n?u=RePEc:qed:dpaper:4628 |
| By: | Shigeo Morita (Fukuoka University); Yukihiro Nishimura (Osaka University and CESifo); Hirofumi Okoshi (Okayama University) |
| Abstract: | As development of online market brings ongoing concerns that foreign app suppliers avoid value-added tax (VAT) in a domestic country, some countries design a tax reform which makes platform pay VAT instead of app suppliers (platform taxation). In the market where the monopoly platformer determines the prices of the network good and the commission fee of the platform services (with online apps as a representative example), this study investigates whether the prevention of tax leaks by platform tax improves the welfare of the host country, as well as the extent of the cross-market incidence of the two-sided market. We find that the tax reform reduces foreign app suppliers and consumption of a network good such as smartphones, with substantial extent of cross-market pass-through. The effect of the tax reform on home app suppliers crucially depends on the responsiveness of the app supplies from the number of users, which we call entry elasticity. Platform tax also increases the tax burden laid on the network product, but the monopoly seller let the increase of the tax burden born entirely by consumers. We also show that digitalization reduces the loss of welfare as well as tax planning by the platformer. |
| Keywords: | Value-added tax; Tax reform; Digital economy; Platform; Network externality |
| JEL: | F23 H26 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:osk:wpaper:2502r |
| By: | Kuusi, Tero; Kotamäki, Mauri; Kirkko-Jaakkola, Mikael |
| Abstract: | Abstract Our analysis indicates that high marginal tax rates may diminish economic activity and weaken public finances in Finland. The existing literature credibly demonstrates that, particularly among highly productive workers, the distortive effects of taxation are more pronounced, impeding both career progression and intangible investments. Supporting research and development (R&D) activities can partially offset the adverse effects of stringent taxation. However, the innovation system should be optimized to effectively internalize the externalities associated with innovations. |
| Keywords: | Taxation, Marginal tax rate, Laffer curve, Externalities, Intangible capital |
| JEL: | D6 E6 H2 H3 J2 J3 |
| Date: | 2025–02–11 |
| URL: | https://d.repec.org/n?u=RePEc:rif:report:158 |
| By: | van 't Riet, Maarten; Lejour, Arjan (Tilburg University, School of Economics and Management) |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:tiu:tiutis:1f76049e-79f4-4b65-a474-7d458624950b |
| By: | Kimberly A. Clausing (Peterson Institute for International Economics) |
| Abstract: | The Tax Cuts and Jobs Act, which Congress passed in 2017, came with a built-in policy time bomb--several of the more popular provisions are set to expire on the last day of 2025. These tax cut expirations limited the cost of the law to meet the requirements of the budget reconciliation process and thereby avoid being blocked by a Senate filibuster. The bill's architects deliberately made the less popular provisions (corporate tax cuts) permanent, but they wagered that the more popular individual tax cuts could be extended when the time came. That time has arrived. Yet Congress faces daunting challenges in extending the expiring tax cuts this year, including their high costs, competing fiscal priorities, a fractious Republican caucus with narrow House and Senate majorities, and President Trump's mercurial demands. As the 2025 tax policy debate moves forward, Clausing offers eight principles that both parties should be able to agree on. Of course, actual agreement on these principles is far from likely in today's political environment. Still, she suggests "middle of the road" positions for those who would resuscitate bipartisan tax policy cooperation. |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:iie:pbrief:pb25-1 |
| By: | Thomas Breda (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Luke Haywood (MCC Berlin - Mercator Research Institute on Global Commons and Climate Change (, DIW Berlin - Deutsche Institut für Wirtschaftsforschung = German Institute for Economic Research); Haomin Wang (Cardiff Business School - Cardiff University) |
| Abstract: | We quantify the unintended effects of a low-wage payroll tax reduction using an equilibrium search model featuring bargaining, worker and firm productivity heterogeneity, labor taxes, and a minimum wage. The decentralized economy is inefficient due to search externalities and labor market policies. We estimate the model using French data and find that a significant reduction in low-wage payroll taxes in 1995 leads to an overall improvement in economic efficiency by increasing employment and correcting existing policy distortions that disincentivize labor force participation. However, the tax reduction, by increasing labor force participation among low-productivity workers and vacancy postings by low-productivity firms, results in negative but minor spillover and reallocation effects due to congestion. We find that the optimal policy mix is a lower minimum wage and lower payroll taxes compared to the policies in place in the early 1990s. |
| Keywords: | Payroll tax, Minimum wage, Equilibrium job search, Worker and firm heterogeneity |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:halshs-04805291 |
| By: | Gunther Capelle-Blancard (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, UP1 - Université Paris 1 Panthéon-Sorbonne) |
| Abstract: | Debates on the taxation of financial transactions (FTT) are longstanding and primarily focus on its effects on markets and the economy. In practice, however, the FTT is less of a regulatory tool and more of a fiscal instrument. This article examines the FTT from this perspective. Our contribution specifically aims to address two questions generally overlooked in previous studies: who pays the FTT and how? Our analysis focuses mainly on the FTT in force in France (FTT-F). In practice, the FTT-F is not a tax on transactions, but only on transfers OF SHARES that are recorded on a daily basis. A large portion of transactions is excluded from the scheme, which significantly reduces the tax base. It is estimated that the transactions actually taxed represent, in the end, only 15% of the total. The incidence of the FTT primarily impacts financial intermediaries, for whom the reduction in trades represents a loss of income, while individuals bear a minimal cost. Additionally, approximately half of the tax is collected from abroard, and the FTT-F has a strong redistributive aspect. The collection of the FTT-F is not carried out by the public administration but is delegated to Euroclear France, a private company subsidiary of an international group. We propose that the collection should instead be directly handled by the General Directorate of Public Finances (DGFiP), with the support of the Fiancial Markets Authority (AMF), which has the necessary data; there are real synergies between its activity of monitoring stock market transactions and the collection of the FTT-F. This, of course, implies that the human and financial resources of the AMF are increased accordingly. Changing the collection system would improve controls, broaden the tax base, and significantly increase tax revenues, while enhancing transparency and equity. |
| Abstract: | Les débats sur la taxation des transactions financières (TTF) sont anciens et portent surtout sur ses effets sur les marchés et l'économie. En pratique, toutefois, la TTF est moins un outil réglementaire qu'un instrument fiscal. C'est sous cet angle que la TTF est étudiée dans cet article. Notre contribution vise en particulier à examiner deux questions généralement ignorées dans les travaux antérieurs : qui paie la TTF et comment ? Notre analyse porte principalement sur la TTF en vigueur en France (TTF-F). En pratique, la TTF-F n'est pas une taxe sur les transactions, mais uniquement sur les transferts de propriété qui sont enregistrés à une fréquence quotidienne. Une très large part des transactions est exclue du dispositif, ce qui réduit considérablement l'assiette de la taxe. On estime que les transactions effectivement taxées ne représentent que 15% du total des transactions. L'incidence de la TTF pèse essentiellement sur les intermédiaires financiers, pour qui la baisse des échanges représente un manque à gagner, tandis que les particuliers supportent un faible coût. Par ailleurs, la moitié environ de la taxe est collectée auprès de contribuables étrangers. La TTF-F présente ainsi un fort caractère redistributif. Le recouvrement de la TTF-F n'est pas opéré par l'administration publique, mais délégué à Euroclear France, société privée filiale d'un groupe international. Ceci a potentiellement des conséquences importantes sur la collecte et les contrôles. Nous proposons que le recouvrement soit plutôt confié directement à la direction générale des Finances publiques (DGFiP), avec l'appui de l'Autorité des marchés financiers (AMF) qui dispose des données nécessaires ; il y a de réelles synergies entre son activité de surveillance des transactions boursières et la collecte de la TTF-F. Cela suppose bien sûr que les moyens humains et financiers de l'AMF soient augmentés en conséquence. Changer le dispositif de collecte permettrait d'améliorer les contrôles, d'élargir l'assiette et d'augmenter significativement les recettes fiscales, tout en renforçant la transparence et l'équité. |
| Keywords: | Financial transaction tax, Securities Transaction Tax, Tobin tax, Innovative financing, Taxe sur les transactions financières, Taxe Tobin, Financements innovants |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:halshs-04650041 |
| By: | Matthew Fisher-Post (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Amory Gethin (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement) |
| Abstract: | This article builds and analyzes a new database on the distributional incidence of taxes and transfers in 151 countries from 1980 to 2019. Our estimates allocate the entirety of tax revenue and public expenditure to individuals, combining household surveys, national accounts, government budgets, tax simulators, and existing fiscal incidence studies. We establish five main findings. (1) Tax-and-transfer systems always reduce inequality, but with large variations. (2) About 90% of these variations are driven by transfers, while only 10% come from taxes. (3) Redistribution rises with development, but this is entirely due to transfers; tax progressivity is uncorrelated with per capita income. (4) Redistribution has increased in most world regions, except in Africa and Eastern Europe, where it has stagnated. (5) About 80% of variations in posttax inequality are driven by differences in pretax inequality ("predistribution"), while 20% are driven by the direct effect of taxes and transfers ("redistribution"). Countries with higher redistribution display lower levels of pretax inequality, however, pointing to a potentially large role of redistributive policies in indirectly shaping the distribution of market incomes. |
| Date: | 2023–11 |
| URL: | https://d.repec.org/n?u=RePEc:hal:psewpa:halshs-04423529 |
| By: | Emmanuel Saez; David G. Seim |
| Abstract: | This paper shows that two features of wealth tax administration in Sweden—(1) filing requirements and (2) pre-populated returns—have a large impact on compliance even in an environment with highly-developed third-party reporting through information returns, challenging the conventional wisdom that third-party information returns are a silver bullet for successful tax enforcement. Up to 1993, everybody had to fill in wealth information when filing the (joint) income and wealth tax return. In 1994-1996, only those with net wealth above the exemption threshold (approximately the top 10%) needed to fill in wealth information. This leads to a very large reduction of about half of the number of taxpayers slightly above the wealth tax exemption threshold, and a reduction of about 20% of the total number of wealth taxpayers above the threshold. Starting in 1997, Sweden began pre-populating wealth information on tax returns for taxpayers with third-party-reported net wealth above the exemption threshold. Symmetrically, this immediately doubles the number of taxpayers slightly above the threshold and increases the number of all wealth taxpayers by almost 20%. We also show that the introduction of information returns for financial wealth in 1986 had a comparatively small impact on wealth reporting. |
| JEL: | H20 |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33419 |
| By: | Annette Alstadsaeter (NMBU - Norwegian University of Life Sciences); Sarah Godar (EU Tax - EU Tax Observatory); Panayiotis Nicolaides (EU Tax - EU Tax Observatory); Gabriel Zucman (EU Tax - EU Tax Observatory, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement) |
| Abstract: | Over the last 10 years, governments have launched major initiatives to reduce international tax evasion. Yet despite the importance of these developments, little is known about the effects of these new policies. Is global tax evasion falling or rising? Are new issues emerging, and if so, what are they? This report addresses these questions thanks to an unprecedented international research collaboration building on the work of more than 100 researchers globally. |
| Date: | 2023–10 |
| URL: | https://d.repec.org/n?u=RePEc:hal:psewpa:halshs-04563948 |
| By: | Onnis, Luisanna (Cardiff Business School, Cardiff University); Piga, Claudio A. (Department of Economics, University of Genoa); Conti, Maurizio (Department of Economics, University of Genoa); Bottasso, Anna (Department of Economics, University of Genoa) |
| Abstract: | In July 2020, the UK government reduced the VAT rate on hospitality services from 20% to 5% as an emergency policy intervention. Using a novel dataset of detailed hotel room characteristics in the UK and elsewhere, we estimate how much of the tax cut was passed on to consumers via a price reduction. We find a statistically significant contemporaneous pass-through to hotel room prices that varies between approximately 20% and 50%, with a peak effect observed in the second week after the reform. However, the pass-through effect is discretionary, as discounts were negligible for rooms sold two months after the policy introduction. |
| Keywords: | VAT Cut; Pass-Through; Hospitality |
| JEL: | H22 H25 L83 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:cdf:wpaper:2025/4 |
| By: | Douglas W. Elmendorf; R. Glenn Hubbard; Heidi L. Williams |
| Abstract: | By design, official budget estimates for legislative proposals generally exclude the proposals’ likely effects on levels of labor, capital, productivity, and other economic outcomes, as well as any feedback effects from changes in those outcomes to the federal budget. Policymakers would benefit from knowing the expected sizes of those economic effects, and advances in research and in the estimating agencies’ tools and experience have made providing estimates of those effects more feasible. If Congress requested that those effects be included more often in budget estimates—so-called “dynamic scoring” of legislation—the advantages and disadvantages of doing so would vary across policy areas. For some areas, the budgetary impacts of the currently excluded effects have been estimated to be significantly different from the impacts of the included effects. But producing dynamic estimates would be substantially more time-consuming than producing conventional estimates, and in some areas, the research base needed to inform modeling of the relevant economic effects is insufficient for credible estimation. |
| JEL: | E6 H2 H3 H5 H6 |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33425 |
| By: | Chris Parker (The Treasury) |
| Abstract: | This report estimates the ‘social rate of time preference’ (SRTP) for New Zealand public policy appraisal using a Ramsey equation. It uses the Weitzman (1998) method to derive a declining discount rate schedule of 2% (real) for years 1–30, 1.5% for years 31–100, and 1% for years 101 on. The report does not compare and contrast social discount rate methods and how to use them in practice. |
| Keywords: | Discounting; social discount rate; time preference, Government |
| JEL: | H43 H50 |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:nzt:nztwps:25/01 |
| By: | Bruno R. Delalibera; Pedro Cavalcanti Ferreira; Rafael Machado Parente |
| Abstract: | In many countries, the regulations governing pension systems, hiring procedures, and job contracts differ between the public and private sectors. Public sector employees tend to have longer tenures and higher wages compared to workers in the private sector. As such, social security reforms can affect both retirement decisions and sectoral choices. We study the effects of social security reforms on retirement and sectoral behavior in an economy with multiple pension systems. We develop a general equilibrium life-cycle model with heterogeneous agents, three sectors - private formal, private informal and public - and endogenous retirement. We quantitatively assess the long-run effects of reforms being discussed and implemented around the world. Among them, we study the unification of pension systems and increasing the minimum retirement age. We calibrate our model to Brazil, where several of the retirement conditions resemble those of other countries. We find that these reforms lower the likelihood of individuals to apply to a public job and increase the profile of savings over the life cycle. In the long run, these reforms lead to higher output and capital, reduced informality, and average welfare gains. They also drastically reduce the social security deficit. |
| Keywords: | Social security reform; Public employment; Public deficit; Informality |
| Date: | 2025–01–31 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2025/032 |