nep-pub New Economics Papers
on Public Finance
Issue of 2016‒02‒12
four papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. The Effect of Competition on Tax Compliance: The Role of Audit Rules and Shame By Alberto Casagrande; Daniela Di Cagno; Alessandro Pandimiglio; Marco Spallone
  2. Taxation and distribution of income in Brazil: new evidence from personal income tax data By Sérgio Wulff Gobetti; Rodrigo Octávio Orair
  3. Fiscal policy and the cycle in Latin America: the role of financing conditions and fiscal rules By Enrique Alberola; Iván Kataryniuk; Ángel Melguizo; René Orozco
  4. Public-Private Partnerships as Collaborative Projects: testing the theory on cases from EU and Russia By Vinogradov, Dmitri; Shadrina, Elena

  1. By: Alberto Casagrande; Daniela Di Cagno; Alessandro Pandimiglio; Marco Spallone
    Abstract: Traditional models of tax enforcement assume that the decision to be tax compliant is the result of an interaction between individual taxpayers and a dedicated tax agency. Evidence shows that tax compliance is the result of a far more complex decision rule, involving both individual and group motivations, along with non-monetary components. In this paper, we consider a game in which the individual decision to be tax compliant is affected both by strategic competition between taxpayers and the psychological cost of being detected (i.e., shame). We ran a laboratory experiment using a sample of 138 students at the Centro di Economia Sperimentale A Roma Est (CESARE), in the experimental lab at the LUISS “Guido Carli†University of Rome, to evaluate the efficiency of random versus targeted audit rules and to verify the interaction between strategic competition and shame. The experimental results show that strategic competition between taxpayers plays a critical role in reducing tax evasion. In addition, shame reinforces this competition, but plays no significant role on its own (i.e., without competition).
    Keywords: Tax evasion, Lab Experiment, Shame, Competition
    JEL: H26 C91 C72
  2. By: Sérgio Wulff Gobetti (IPC-IG); Rodrigo Octávio Orair (IPC-IG)
    Abstract: This paper presents a critical analysis of income and profit taxes in Brazil, demonstrating how measures adopted in the 1980s and 1990s, as a result of mainstream recommendations, hindered the redistributive role of taxes in the country. Investigation of tax data reveals a high degree of income concentration at the top of the distribution, low progressivity and violations of the principles of horizontal and vertical equity. The main reason for these distortions is the complete tax exemption of dividends for shareholders, a benefit that is very rarely seen in developed countries. We propose a return to a progressivity-focused tax reform plan, a theme that has returned as a focus of debates with Piketty (2014). (?)
    Keywords: Taxation, distribution, income in Brazi, evidence, tax data, tax reform, tax progressivity
    Date: 2016–02
  3. By: Enrique Alberola (BIS); Iván Kataryniuk (Banco de España); Ángel Melguizo (OECD DEVELOPMENT CENTRE); René Orozco (OECD DEVELOPMENT CENTRE)
    Abstract: Their strong macroeconomic position when the financial crisis erupted allowed Latin American economies to mitigate its impact through fiscal expansions, reversing the characteristic procyclical behaviour of fiscal policy. At the same time, in the last two decades fiscal rules have been extensively adopted in the region. This paper analyses the stabilising role of discretionary fiscal policy over time, and the role of fiscal financing conditions and fiscal rules in the behaviour of a sample of eight Latin American economies. The analysis shows three main results: i) fiscal policies became countercyclical during the crisis, but they have turned procyclical again in recent years; ii) financing conditions are confirmed to be a key driver of the fiscal stance, although their relevance has recently diminished; and iii) fiscal rules are associated with a more marked stabilising role for fiscal policy.
    Keywords: procyclical fiscal policy, fiscal rules, financing conditions, Latin America.
    JEL: H3 G12
    Date: 2016–02
  4. By: Vinogradov, Dmitri; Shadrina, Elena
    Abstract: Public-private partnerships (PPP) allow involvement of private parties in the provision of public goods. How does this differ from traditional public procurement? We view PPPs as collaborative projects with information frictions. Typical public procurement contracts tackle the problems of asymmetric information. However, not all projects are contractible; some are not profitable enough to ensure participation of the private partner. This is due, in part, to costly information verification, and in part to the profitability requirements of the private party. We demonstrate what specific features of a partnership can improve feasibility of projects, and thus both provide a justification of PPP as a form of public good provision, and demonstrate how and whether it differs from procurement. We then analyse real life examples of PPP projects from the perspective of optimal choice of contracts, involvement of both partners, and the features that make these PPP arrangements superior to public procurement.
    Keywords: public-private partnerships, public finance, contracting
    Date: 2016

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