nep-pub New Economics Papers
on Public Finance
Issue of 2023‒05‒01
five papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Wayfair: A Step Towards the Destination, But Sales Tax Competition Remains By Donald Bruce; William F. Fox; Alannah M. Shute
  2. Excise Tax Incidence: The Inequity of Taxing Obesity and Beauty By Osaid Alshamleh; Glenn P. Jenkins; Tufan Ekici
  3. The effect of tax incentives on private pension saving By Laurence O'Brien
  4. Finnish Companies in the Vortex of International Tax Reforms By Ropponen, Olli; Viertola, Marika; Kari, Seppo; Valkonen, Tarmo
  5. Revenue Performance Assessment of Indian GST. By Mukherjee, Sacchidananda

  1. By: Donald Bruce; William F. Fox; Alannah M. Shute
    Abstract: The U.S. Supreme Court decision in the landmark 2018 Wayfair case greatly improved state governments’ ability to enforce collection of sales taxes on a destination basis. This has reduced state tax competition with an essentially-untaxed internet, but has brought traditional cross-border shopping, which is often subject to origin taxation, back to prominence among policy makers and researchers. We provide a detailed discussion of state and local sales tax features and the extent to which they have fostered sales tax competition in recent decades. We then explore the extent to which greater destination taxation has influenced the location of (a) consumer purchases and (b) business locations using two different empirical approaches. First, we analyze county-level data for Tennessee and select surrounding states to provide suggestive evidence that sales tax collections have grown more in rural Tennessee counties and less in Tennessee border counties since Wayfair. Additionally, we show that collections have grown more since Wayfair in North Carolina counties along the Tennessee border, where the tax rate differential is on the order of 3.3 percentage points. Second, we examine state-level data to show that business applications have grown at much faster rates after Wayfair in states with the highest sales tax rates. We attribute this to the removal of the significant disincentive to establish sales tax nexus that dominated the pre-Wayfair environment.
    JEL: H20 H26 H27 H71 H77
    Date: 2023–03
  2. By: Osaid Alshamleh (Department of Accounting and Finance, Cyprus International University, Hespolat, Mersin 10, Turkey); Glenn P. Jenkins (Department of Economics, Queens University, Kingston, Ontario, Canada and Cambridge Resources International Inc.); Tufan Ekici (Department of Economics, Ramapo College of New Jersey, Mahwah, N.J. USA)
    Abstract: The estimation and analysis of the distribution of the negative health impacts of certain commodities subject to excise taxes in Belize and the distribution of the burdens of the excise taxes across households of different income levels are the focus of this article. Particular attention is given to the taxation of soft drinks and cosmetics. We examine the income distribution and tax revenue impacts using the commodity data from the household expenditure survey by and the effective tax rates expressed as a percentage of the value of the final consumption of each item. As in many developing countries, taxes on alcoholic beverages and tobacco products are found to be regressive. The most regressive excise taxes are on soft drinks and cosmetics. Households across the economy pay more in excise taxes on cosmetics than they do on either alcoholic beverages or tobacco products. Relative to the level of household expenditures, the burden of the excise taxes on cosmetics is highest for households in the lowest quintile of total expenditures. The impact of soft drinks in creating obesity is likely to be much greater for high income households whose total consumption per household is twice that of low-income households.
    Keywords: excise tax, tax incidence, cosmetics, soft drinks, obesity, regressivity, Belize
    JEL: H22 L66
    Date: 2023–04–10
  3. By: Laurence O'Brien (Institute for Fiscal Studies)
    Date: 2023–02–24
  4. By: Ropponen, Olli; Viertola, Marika; Kari, Seppo; Valkonen, Tarmo
    Abstract: Abstract International corporate tax system does not succeed very well in taxing the cross-border business of the multinational enterprises. Therefore, both the European Union (EU) and the Organization for Economic Cooperation and Development (OECD) have proposed several tax reforms. We recognize in this Etla Report the most central corporate tax reform proposals and evaluate their effects on the tax burden of the Finnish companies and on the tax revenues in Finland. The common consolidated corporate tax base (CCCTB) proposed by the OECD, would reduce the investment incentives by increasing the tax burden of companies. It would also reduce the corporate tax revenues in Finland. The reallocation of residual profits (Pillar 1) would neither affect Finnish companies nor tax revenues in Finland. Minimum tax (Pillar 2) is the only reform that provides favorable outcomes for both companies and government. It increases the investment incentives of companies by reducing their tax burden, while at the same time increasing the tax revenues in Finland. The proposed 15 percent minimum tax rate is better option from both the company and the government perspective than higher minimum tax rates. See also Etla Brief no 120 The Devil Is in the Details: Suomalaiset yritykset kansainvälisten veroreformien pyörteissä.
    Keywords: International corporate taxation, Multinational enterprises (MNEs), Investments, Business in Europe: Framework for Income Taxation (BEFIT), Pillar 1, Pillar 2, Common (Consolidated) Corporate Tax Base (C(C)CTB)
    JEL: H25 H71 F21 F23 G11
    Date: 2023–04–12
  5. By: Mukherjee, Sacchidananda (National Institute of Public Finance and Policy)
    Abstract: By comparing comparable revenue streams of pre- and post-GST periods, in this paper we assess the revenue performance of GST in India for the period 2012-13 to 2022-23. Sustaining revenue streams of the Union and State governments (in terms of percentage share in nominal Gross Domestic Product or GDP) between the pre- and a post-GST period is important for sustainable Public Finance Management. We observe that post-GST tax buoyancy in the GST regime has improved for the Union government as well as in overall GST collection. However, average tax buoyancy of State portion of GST has not improved yet. GST-to-GDP ratio of the Union as well as state governments not yet improved during post-GST period as compared to equivalent share of respective revenue streams in GDP during the pre-GST period. Based on available information, we estimate C-efficiency ratio (or collection efficiency), Effective Tax Rates, Compliance Gap and Policy Gap of GST for the period Q2:2017-18 to Q3:2022-23. We find that average C-efficiency of GST is 0.54 (or 54 %) which is in line with available evidences from developing Asian countries. Average ETR has gone up from 10.91 per cent in 2020-21 to 12.21 per cent in 2021-22 and 12.56 per cent upto Q3:2022-23 of 2022-23. The share of policy gap in C-efficiency is higher than compliance gap which is in line with available evidences from EU and OECD countries.
    Keywords: Revenue performance assessment ; Goods and Services Tax (GST) ; C-efficiency ; Compliance Gap ; Policy Gap ; Effective Tax Rate (ETR) ; India
    JEL: H20 E62 H26
    Date: 2023–04

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