nep-pub New Economics Papers
on Public Finance
Issue of 2017‒03‒26
four papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. The true art of the tax deal: Evidence on aid flows and bilateral double tax agreements By Braun, Julia; Zagler, Martin
  2. Reassessing Tax Effort in Developing Countries: a Proposal of a Vulnerability-Adjusted Tax Effort Index (VATEI) By Djedje Hermann YOHOU; Michaël GOUJON
  3. Vertical and Horizontal Redistributions from a Carbon Tax and Rebate By Julie Anne Cronin; Don Fullerton; Steven E. Sexton
  4. Renegotiating Public-Private Partnerships By Miranda Sarmento, J.J.; Renneboog, Luc

  1. By: Braun, Julia; Zagler, Martin
    Abstract: Out of a total of 2,976 double tax agreements (DTAs), some 60% are signed between a developing and a developed economy. As DTAs shift taxing rights from capital importing to capital exporting countries, the prior would incur a loss. We demonstrate in a theoretical model that in a deal one country does not trump the other, but that the deal must be mutually beneficial. In the case of an asymmetric DTA, this requires compensation from the capital exporting country to the capital importing country. We provide empirical evidence that such compensation is indeed paid, for instance in the form of bilateral official development assistance, which increases on average by six million US$ in the year of the signature of a DTA.
    Keywords: developing countries, foreign aid, double taxation agreements
    Date: 2017–03
  2. By: Djedje Hermann YOHOU (Cerdi - Université d'Auvergne); Michaël GOUJON (Université d'Auvergne)
    Abstract: This paper describes the estimation of a new tax effort index for 120 developing countries over 1990-2012. Two major innovations are the use of a new measure of non-resource tax revenues and the correction of the traditional method of tax effort estimation by accounting for structural economic and human vulnerabilities. The results indicate that economic vulnerability is harmful to tax while human asset enhances tax. Moreover, Sub-Saharan African countries exhibit an outstanding vulnerability-adjusted tax effort compared to the other countries.
    Keywords: tax effort, economic vulnerability, human assets, non-ressource tax revenue, non-ressource GDP, Developing countries
    Date: 2017–02
  3. By: Julie Anne Cronin; Don Fullerton; Steven E. Sexton
    Abstract: Because electricity is a higher fraction of spending for those with low income, carbon taxes are believed to be regressive. Many argue, however, that their revenues can be used to offset the regressivity. We assess these claims by employing data on 322,000 families in the U.S. Treasury’s Distribution Model to study vertical redistributions between rich and poor, as well as horizontal redistributions among families with common incomes but heterogeneous energy intensity of consumption (different home heating and cooling demands). Accounting for the statutory indexing of transfers, and measuring impacts on annual consumption as a proxy for permanent income, we find that the carbon tax burden is progressive, rising across deciles as a fraction of consumption. The rebate of revenue via transfers makes it even more progressive. In every decile, the standard deviation of the change in consumption as a fraction of consumption varies around 1% or 2% and is larger than the average burden (about 0.7%). When existing transfer programs are used to rebate revenue, the tax and rebate together increase that variation to more than 3% within each decile. The average family in the poorest decile gets a net tax cut of about 1% of consumption, but 44% of them get a net tax increase. Relative to no rebate, every type of rebate we consider increases this variation within most deciles.
    JEL: H22 H23 Q48 Q54
    Date: 2017–03
  4. By: Miranda Sarmento, J.J. (Tilburg University, Center For Economic Research); Renneboog, Luc (Tilburg University, Center For Economic Research)
    Abstract: The renegotiations of public–private partnership (PPP) contracts are commonly considered to be one of the pitfalls of PPPs, as they tend to undermine their (ex ante) efficiency. A renegotiation occurs when specific events change the conditions of a concession, frequently leading to a financial claim from the private sector on the public sector. This paper examines the Portuguese experience with PPP renegotiations by means of a unique panel data of 254 renegotiation events from 1995 to 2012. We find evidence of opportunistic bidding for PPP contracts, which is ex post – after the contract is won and the competition eliminated - leading to renegotiations to increase revenues. Renegotiations last on average 1.8 years. Majority governments are more prone to renegotiate and have more political clout to limit the renegotiation duration. There is no evidence of more renegotiations in election years or when there is a change in government. A better institutional framework, defined as a low country risk, a strong rule of law, and lower corruption, tends to reduce the probability of renegotiations. There is also evidence that at times of higher corruption, more renegotiations occur. The project’s leverage decreases the renegotiation duration. Strong initial bidder competition for a PPP contract leads to long subsequent renegotiations between the winning private party and the government.
    Keywords: publi-private partnerships; concessions; Renegotiations
    JEL: G38 H54 L51
    Date: 2017

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