nep-pub New Economics Papers
on Public Finance
Issue of 2013‒10‒02
four papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. The stability of tax elasticities in The Netherlands By Leon Bettendorf; Duncan van Limbergen
  2. World Experience of Taxation of Extractive Industries By Yuri Bobylev
  3. Offshore financial centers: Safe or tax havens By Patrice Pieretti; Jacques-François Thisse; Skerdilajda Zanaj
  4. Framework for Structuring Public Private Partnerships in Railways By Gangwar, Rachna; Raghuram, G.

  1. By: Leon Bettendorf; Duncan van Limbergen
    Abstract: We estimate long-run and short-run elasticities of Value Added Tax and Personal Income Tax revenues with respect to their bases for the Netherlands. We find VAT elasticities around one in the long-run and short-run. The long-run PIT elasticity is significantly below one, while the short-run elasticity is around one. We experiment with alternative definitions of the tax base for both taxes. We first find that elasticity estimates remain unaffected by using a broader base for both taxes. Second, the conclusion on whether elasticities differ between `good' and `bad' times depends whether the definition of these regimes is based on the deviation of tax revenues from the long-run level or on the output gap. Third, stability over time cannot be rejected for all elasticities, except for the long-run PIT elasticity to the broad base.
    JEL: E62 H24 H68
    Date: 2013–09
  2. By: Yuri Bobylev (Russian Presidential Academy of National Economy and Public Administration)
    Abstract: The paper deals with the global experience of taxation of extractive industry, including both the basic principles and practice of taxation identifying the main groups of countries with differing levels of economic development: countries with developed market economies, developing countries and countries in transition economy. Identifies the key trends in the taxation of extractive industry, exploring the possibilities of application of international experience in Russia, including the possibility of imposing a special tax on additional income and cancellations export duties. Given the international experience makes proposals for improvement of the Russian system of taxation of extractive industry.
    Keywords: taxation
    JEL: H2
    Date: 2013–06
  3. By: Patrice Pieretti (CREA, Universite de Luxembourg); Jacques-François Thisse (Universite catholique de Louvain); Skerdilajda Zanaj (CREA, Universite de Luxembourg)
    Abstract: This paper explains why and how a small country can be an offshore financial center (OFC). We build a model involving a small and a large country competing for portfolio investments. They use two instruments, taxation and institutional infrastructure. We identify the conditions for an OFC to be a tax haven, a safe haven or both. The existence of a tax haven need not be as bad as claimed in the media because its presence fosters institutional competition which is beneficial to all investors,
    Keywords: offshore financial centers, portfolio investments, institutional infrastructure competition, tax competition
    JEL: H40 H54 G20
    Date: 2013
  4. By: Gangwar, Rachna; Raghuram, G.
    Abstract: Structuring Public Private Partnerships (PPPs) in railways is a challenge, given its technology base, and obligation as a public and affordable mode of transportation. The sector provides strong incentives for vertical integration due to economies of scope. However, it is evident from the literature that large integrated PPPs in railways systems are not feasible due to higher commercial risks. They also suffer from implicit cross subsidization since the railway infrastructure is capital intensive, common to multiple revenue sources, and fare box revenues are generally not sufficient to recover investments. This is being addressed by various unbundling approaches in recent PPPs. This research explores the potential of unbundling the railway system into over 40 ‘elements’ wherein an element is the smallest unit that can be given to a party for execution. This would however result in significant horizontal and vertical interfaces between these elements. A sustainable PPP would need to limit the extent of interfaces due to transaction costs and risks. This can be achieved by bundling the elements horizontally and/or vertically into ‘entities’ to extract the best value for a PPP. The governing principles would be scale economies (horizontal integration), scope economies (vertical integration), need for competition (horizontal disaggregation), level playing field, transactional transparency, and need for specialization (vertical disaggregation). Additional drivers would be appetite for investment, availability of competence and accountability for an entity. The findings of the research indicate that the entity formation is one of the most crucial aspects of a PPP in railways. A consequential critical area is managing the interfaces between entities, which are subject to transaction costs and risks. These should be carefully identified and addressed by well-designed contractual agreements and independent regulation

This nep-pub issue is ©2013 by Kwang Soo Cheong. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.