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on Public Finance |
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Issue of 2018‒07‒16
four papers chosen by |
| By: | Athiphat Muthitacharoen (Assistant Professor, Faculty of Economics, Chulalongkorn University); Vatcharin Sirimaneetham (Macroeconomic Policy and Financing for Development Division, United Nations Economic and Social Commission for Asia and the Pacific) |
| Abstract: | Actual tax collections have fallen short of their potential levels in the Asia-Pacific region. An ESCAP study estimated the tax potential in the region, based on each country’s economic structure, including such factors as agricultural value added, GDP per capita level and the degree of trade openness. The analysis showed that actual tax collection levels were below their potential levels in 17 Asia-Pacific economies with available data. Such tax gaps are estimated to be more than 6 per cent of GDP in such countries as Afghanistan, Bangladesh, Bhutan and Maldives. To narrow the tax gap, countries could consider (a) enhancing the quality of tax administration, and (b) expanding the tax base. This policy brief focuses on policies aimed at broadening the tax base. |
| URL: | http://d.repec.org/n?u=RePEc:unt:pbmpdd:pb69&r=pub |
| By: | Athiphat Muthitacharoen (Assistant Professor, Faculty of Economics, Chulalongkorn University); Vatcharin Sirimaneetham (Macroeconomic Policy and Financing for Development Division, United Nations Economic and Social Commission for Asia and the Pacific) |
| Abstract: | Actual tax collections have fallen short of their potential levels in the Asia-Pacific region. An ESCAP study estimated the tax potential in the region, based on each country’s economic structure, including such factors as agricultural value added, GDP per capita level and the degree of trade openness. The analysis showed that actual tax collection levels were below their potential levels in 17 Asia-Pacific economies with available data. Such tax gaps are estimated to be more than 6 per cent of GDP in such countries as Afghanistan, Bangladesh, Bhutan and Maldives. To narrow the tax gap, countries could consider (a) enhancing the quality of tax administration, and (b) expanding the tax base. This policy brief focuses on tax administration. |
| URL: | http://d.repec.org/n?u=RePEc:unt:pbmpdd:pb68&r=pub |
| By: | Mohammed Mardan; Michael Stimmelmayr |
| Abstract: | This paper analyzes tax competition between countries which differ in their country-specific risk. We show that the outcome of asymmetric tax competition crucially depends on the ability of multinational firms to shift profits. With high costs of profit shifting, higher-risk countries set lower tax rates than lower-risk countries whereas the opposite is true if the costs of profit shifting are low. The results provide an explanation for the patterns observed in the corporate income tax policies across countries and regions differing in their level of development. Moreover, for intermediate costs of profit shifting, we show that also a country’s absolute risk level affects countries’ tax rate setting. These results carry important implication for the empirical tax competition literature. |
| Keywords: | tax competition, country risk, developing countries, asymmetric countries |
| JEL: | H25 O23 F23 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7090&r=pub |
| By: | Sónia Araújo; Stéphanie Guichard |
| Abstract: | Consecutive years of primary deficits have led to mounting public debt of almost 50% of GDP, one of the fastest increases in Latin America over the last decade. Government attempts to restore fiscal health have been undermined by a gridlocked Congress. While only minor reforms have been enacted to contain spending, efforts to curb tax evasion and increase the efficiency of the tax administration are commendable. However, increases in tax revenue have been unable to match mandated increases in spending. As a consequence, sovereign debt ratings have declined to below investment level, and the negative outlook on Costa Rica’s debt signals increasing financing costs. Against this backdrop, the risk of a fiscal crisis is increasing, particularly as global financial conditions become less favourable and debt structure has shifted towards increased reliance on floating rates and dollar-denominated bonds. Enacting a three year fiscal consolidation programme of one percentage point of GDP each year, will enable debt to stabilise at current levels by 2032. The current draft bill to strengthen public finances – Ley de Fortalecimiento de las Finanzas Públicas – proposes a comprehensive fiscal reform package, with measures on both the revenue and the spending side, as well as a fiscal rule. It needs to be complemented with additional measures to contain revenue earmarking. In addition, reducing excessive fragmentation of the public sector would allow the Ministry of Finance to regain control of the budget. There is also room to reduce expenditure on remuneration of public sector workers, one of the fastest growing expenditure items and a source of income inequality. The proposed fiscal rule should be strengthened, including introducing a multi-year expenditure framework and a fiscal council. Debt management should be modernised by stepping up communication with markets and reducing the number of benchmark securities. Over time, improving social spending efficiency and quality as well as modifying the tax structure away from social security contributions and enlarging the tax base would allow for a much stronger contribution of fiscal policy to growth and equity. |
| Keywords: | Costa Rica, debt sustainability analysis, fiscal framework, fiscal policy, fiscal vulnerability, government spending, revenue earmarking, taxation |
| JEL: | H10 H11 H50 H51 H52 H53 H60 H61 H62 H63 H68 |
| Date: | 2018–07–04 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:1484-en&r=pub |