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on Public Economics |
| By: | Yarygina, Anastasiya; Martínez, André |
| Abstract: | In recent years, tax administrations around the globe have leveraged digital transformation to enhance processes and services to improve tax compliance. Massive self-regularization platforms, which identify noncompliant taxpayers, notify them about the detected inconsistencies, and allow them to amend the situation with the tax authority, are prominent examples of the digital transformation of tax administrations. This study presents the results of the randomized controlled trial evaluating the effectiveness of such a self-regularization platform in the Brazilian State of Para. The results show that the platform increased the amount of the taxes paid by 12.78 times and the probability of tax compliance by 236 percent. Overall, the effectiveness of self-regularization in recovering the evaded tax is 60 percent higher than that of the traditional audit-based approach. The amount of the correction in the declared tax increased by 2.33 times, and the probability of correction by 300 percent. Given the low marginal cost of self-regularization, the results suggest that these platforms are a remarkable opportunity for tax administrations to leverage digital transformation effectively and efficiently, improving tax compliance and increasing tax revenue. |
| Keywords: | digitalization;Tax compliance;Taxpayer support |
| JEL: | H26 H30 H32 O38 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:idb:brikps:13975 |
| By: | Laurence Jacquet; Etienne Lehmann |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:tep:teppwp:wp25-03 |
| By: | Christopher Alexander Hoy; Filip Jolevski; Anthony Obeyesekere |
| Abstract: | This paper examines the pervasiveness of tax evasion among firms in Indonesia and the characteristics associated with higher levels of noncompliance. Tax evasion is estimated through a randomized, double-list experiment embedded in a nationally representative survey of 2, 955 registered firms. This revealed whether firms pay all the taxes they owe without them having to disclose this directly. Across both list experiments, around a quarter of the firms indirectly reveal that they have evaded taxes. Firms that do not export, face intense competition from informal firms, and believe tax administration is a major obstacle to their business are the most likely to evade taxes. These findings help to inform the enforcement activities of tax authorities in middle-income countries, which face substantial challenges in estimating levels of tax evasion and identifying noncompliant taxpayers. |
| Date: | 2024–07–22 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:10857 |
| By: | Pinto, David Pineda; Bermúdez, Jose Carlo; Thiago De Gouvea Scot de Arruda |
| Abstract: | Late or unreliable refunds of credits undermine the best traits of value-added tax (VAT) systems and might affect firms' growth and investment opportunities. This paper uses administrative tax records in Honduras to study a tax reform that decreased the withholding rate of value-added tax liabilities by credit and debit card (DCC) providers, aiming to curb unrefunded credits. Using a difference-in-differences approach, exploiting differential exposure to the reform, the paper documents that it caused a decrease in excessive withholding and was equivalent to a cut of 1.1 percentage points in effective tax rates faced by treated firms. The paper then evaluates the effects on firms' economic performance and estimate null effects on several indicators of economic growth and investment. The results challenge the premise that unrefunded VAT credits are an important constraint to firm growth in certain settings. Keywords: VAT refunds, withholding, firms’ performance. |
| Date: | 2024–12–11 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:10996 |
| By: | Stéphane Gauthier (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); Fanny Henriet (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: | We consider optimal anonymous consumption taxes in situations where the magnitude of an externality varies with individuals who cause it. For instance, urban fuel consumers generate greater pollution damages compared to rural consumers, but both groups are subjected to the same fuel tax. We provide a condition for the validity of the targeting principle, where external concerns are only addressed through the tax imposed on the commodity responsible for the externality. When this condition holds, one can separate the equity/efficiency and environmental components of this tax. An illustration suggests that Pigovian considerations explain most of the fuel tax in France. |
| Keywords: | Targeting principle, Local externality, Pollution, Pigovian tax, Consumption taxes, Fuel, Budget de famille |
| Date: | 2023–09 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:halshs-04331432 |
| By: | Julien Albertini; Arthur Poirier; Anthony Terriau |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:tep:teppwp:wp25-01 |
| By: | Veronica Sonia Montalva Talledo; Sailesh Tiwari; Wang, Yang; Maria Ana Lugo; Lustig, Nora |
| Abstract: | How redistributive are fiscal policies in China? This paper applies the standard fiscal incidence analysis to data from the China Family Panel Study 2018 to study the effect of government taxes and spending on inequality in China. The analysis includes fiscal elements, such as personal income tax, contributions to social insurance, value-added tax, consumption tax, cash transfers, contributory pensions, and spending on education and health, and accounts for 63 percent of total revenues and 43 percent of total government spending. Consistent with previous studies, the paper finds that fiscal policy in China continues to redistribute quite effectively, achieving inequality reduction of about 10.3 Gini points, placing China around the median of upper-middle-income country peers on the level of redistribution achieved by fiscal policy. Not unlike several other countries where similar analysis has been done, most of the inequality reduction achieved by China is through education and health spending. Findings from the paper further suggest that while the fiscal system delivers more to those who need the most support, the heavy burden of user fees—relative to disposable income—may prevent some families from accessing needed health care services and imply high costs of raising children. In addition, there is room for the progressivity of the overall package to be enhanced. In particular, the fiscal system could make a greater dent in inequality by collecting more from those who could afford to pay more and leaving more money in the pockets of those who need it the most. This could be done by increasing the share of fiscal revenues collected through progressive taxes such as personal income tax and increasing the level of cash-based social benefits (such as residents’ pensions and transfers). |
| Date: | 2024–09–03 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:10887 |
| By: | Monica Robayo; Balaban, Georgiana; Wronski, Marcin |
| Abstract: | This paper uses statistical matching techniques to assess tax compliance and underreporting of labor income in Romania, overall and for different population groups, including among minimum wage workers, to understand the distributional implications and its links with minimum wage policy and design. Understanding the extent and distribution of tax evasion is relevant for enhancing domestic tax capacity, its redistributive impacts, and the links with social policy, including minimum wage policy. Estimating the average underreporting of income is challenging due to the significant underrepresentation of top incomes in survey data. After censoring, the average underreporting of income is 6 percent. When looking at the distribution of tax evasion, the analysis also shows significant underreporting of income in the bottom half of the income distribution. The results show that tax-reported income at the median of the income distribution equals only 90 percent of the true (survey) income, and at the 25th percentile, this share is 83 percent. Women are more tax compliant than men. Tax compliance varies across sectors of the economy, regions of the country, and demographic groups. Transport, construction, and food and accommodation are the sectors of the economy with the lowest tax compliance. The underreporting of income results in lower fiscal capacity for the country and may also lower the efficiency of means-tested social assistance. The underreporting of income significantly increases the share of minimum wage earners, which may impact the minimum wage policy. |
| Date: | 2024–10–02 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:10940 |
| By: | Jesús López-Rodríguez; Diego Martínez-López; Brais Pociña-Sánchez |
| Abstract: | The foot-loose capital (FC) models predict that agglomeration forces create rents for the mobile factor (capital), which can be easily taxed, and thus higher equilibrium tax rates are expected. This paper uses a highly flexible econometric specification (P-Spline spatial autoregressive model, PS-SAR) to look at the relationship between tax rates and agglomeration economies in Spain over the period 2013-2020. Our results show the existence of a minimum level of agglomeration economies that are required to find taxable agglomeration rents. This outcome calls for a reassessment of the linear FC models to disentangle which mechanisms might lead to these phenomena. |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:fda:fdaddt:2025-02 |
| By: | Rishabh Choudhary; Franz Ulrich Ruch; Emilia Skrok |
| Abstract: | Tax revenue collection is essential to the state’s ability to address market failures, provide goods and services such as health and education, invest in infrastructure, stabilize the economy in response to shocks, and maintain sustainable debt dynamics. Using a regression discontinuity design, this paper demonstrates that there is a tax threshold around 15 percent of gross domestic product where future inclusive growth improves significantly. This may be due to increased productive spending, more progressive taxes, and lower output volatility. The paper also shows that low-income countries graduate to middle-income status around the same threshold. |
| Date: | 2024–10–04 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:10943 |
| By: | Da Costa, Carlos; Maestri, Lucas; Santos, Cezar |
| Abstract: | When searching for employment, workers consider non-wage job characteristics, such as effort requirements or amenities. We study an environment where unemployed workers search for jobs of different quality in a labor market characterized by directed search. In equilibrium, firms are more likely to post vacancies for low-quality jobs, as these are more profitable. Hence, high-quality jobs are hard to come across. The non-observability of these employment contracts influences the optimal unemployment insurance (UI) program, leading to distortionary taxation. Calibrating the model to the U.S. economy, we find that non-observability of employment contracts results in faster declining UI benefits, steeper taxes upon re-employment, distortionary taxation, and a 10.5% costlier program than an observable contract scenario providing equal welfare. |
| JEL: | H21 J64 |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:idb:brikps:13974 |
| By: | Picciotto, Sol |
| Abstract: | Protracted debates and negotiations have led to a new approach to taxation of multinationals: apportionment of their global profits based on their real presence in each country. A concerted initiative by willing states could implement this approach using standards now agreed, facilitated through the UN Framework Convention now under negotiation. |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:colfdi:311080 |
| By: | Barry Eichengreen (University of California, Berkeley); Poonam Gupta (National Council of Applied Economic Research, Delhi, India) |
| Abstract: | Fully a third of India’s very considerable public debt is debt of the states, a large fraction by the standards of other federal economies. State debts vary from less than 20 percent of state GDP in Odisha, Maharashtra and Gujarat to nearly 50 percent in Punjab. The recent evolution of these variables points to continued divergence in debt burdens across lightly and heavily indebted states and bodes difficulties for the latter in meeting all but essential expenditures. In the last ten years, half of India’s larger states have added more than 10 percentage points to their debt-to-state-GDP ratios. Of the rest, about half have exhibited fiscal prudence, while the other half have exhibited moderate levels of debt increase. Under the business-as-usual scenario, a majority of states will become even more indebted, and the financial condition of more and less indebted states will continue to diverge. We point to reforms to strengthen fiscal discipline at the state level and address risks associated with the states’ relatively high level of public debt. |
| Keywords: | Debt Management, Debt Sustainability, Federal Finance, Finance Commission, Fiscal Deficit, Public Debt, Contingent Liabilities, Subnational Finance |
| JEL: | E62 H6 H61 H63 H72 H74 H75 H77 |
| Date: | 2025–02–24 |
| URL: | https://d.repec.org/n?u=RePEc:nca:ncaerw:180 |