Tax Policy Changes Research Articles

Analysis Of The Impact Of Tax Reform On Income Tax (PPH) 21 Revenue In Indonesia

This research aims to analyze the impact of tax reform on Income Tax (PPH) 21 revenues in Indonesia. Tax reform was carried out by the government to increase efficiency and fairness in the tax system. The main focus of this research is identifying tax policy changes that have been implemented and analyzing how these changes affect PPH Article 21 revenue. This research uses a qualitative approach with descriptive methods, while the type of research uses literature study research to analyze tax policy, as well as the impact of tax reform on revenue. PPH Article 21. It is hoped that the results of this research will provide a better understanding of the effectiveness of tax reform in increasing income tax revenues from high-income employees.

The effect of addback statutes on CEO compensation

AbstractExploiting the adoption of addback statutes, which occurred at different times, as exogenous shocks to corporate taxable income, we examine the effect of tax policy changes on the compensation of chief executive officers (CEOs). We provide evidence that CEOs of firms headquartered in states affected by addback statutes experienced a decrease in total compensation; the decrease is stronger for firms with higher intangibles and asset replacement costs relative to book values, and weaker for firms whose CEOs are more powerful. Our results have important implications for policy‐makers who strive to combat pay inequality and managerial myopia through tax laws.

The impact of new VAT enforcement on financial performance: Evidence from Saudi Arabia non-financial listed companies using the event study and ARMA model

This paper examines the influence of the new 15 % Value Added Tax (VAT) enforcement on non-financial listed companies in Saudi Arabia. By comparing financial data from 2019, before the VAT implementation and the COVID-19 pandemic, with data from 2020, during both the VAT increase and the pandemic, the research aims to uncover the consequences of this tax policy change. Utilizing charts, tables, and an event study analysis approach with the Autoregressive Moving Average (ARMA) model, we investigated key financial indicators such as Shareholders' Equity (SE), Total Income (TI), Total Revenues (TR), Net Income (NI), Total Expenses (TE), Other Changes in Operating Activity (COA), and Cash at the End of the Period (CEP). The findings reveal significant financial impacts, highlighting companies' challenges due to the increased tax burden. Shareholders' Equity dropped from an average of 11.55 million to 4.57 million, and Total Income and Total Revenues decreased from approximately 1.73 million to 316,234 and from 1.95 million to 331,605, respectively. Net Income sharply declined from 406,109 to 74,624, and Total Expenses decreased from about 1.18 million to 223,495. Other Changes in Operating Activity shifted from a negative mean of −168,936 to a positive 523,520, and Cash at the End of the Period fell from 1.99 million to 666,663. These results suggest that the VAT increase has significantly strained companies' financial performance, emphasizing the need to consider such tax reforms carefully, particularly in developing countries. The study concludes that while the VAT increase aims to enhance government revenues, it imposes substantial financial strain on companies, potentially leading to long-term economic repercussions. Policymakers should consider these implications and implement practical measures to optimize the VAT system and support business resilience in the face of such reforms.

Tax Policy Expectations and Investment

ABSTRACTThis paper examines how firms’ tax policy expectations (TPE) evolve around and relate to their investment responses to changes in tax policy. Using a text‐based approach to measuring TPE, we find that two recent tax policy–changing events—namely, the 2016 U.S. presidential election and the enactment of the Tax Cuts and Jobs Act (TCJA)—spawned considerable between‐ and within‐firm variation in TPE, with aggregate time‐series patterns in TPE occasionally challenging prevailing assumptions in previous research. Further, we observe that event‐induced TPE relate to investment both before and in response to the TCJA's passage in 2017, with offsetting associations between its first and second moments, and that these TPE moderate the TCJA's intended investment‐stimulating effect. Furthermore, we document a difference between domestic and multinational firms in their TPE‐investment response, with the former (latter) more likely to adjust the level (shift the country location) of their investment. Overall, our findings support the idea that TPE can impact investment behavior in the face of a tax policy change and suggest that our methodology can be used by future research to incorporate TPE into analyses of tax policy effects.

Homestead Tax Deductions and Home Values: The Case of Washington DC Versus Maryland

In Washington DC, homeowners benefit from a generous homestead property tax deduction, which significantly reduces their property tax burden. This deduction specifically exempts a substantial portion of home assessment values from taxation. To understand the causal effects of this policy on home values, this article examines the impact of an increase in DC homestead tax deductions. The increase was implemented as a policy decision to index the homestead deduction to the Consumer Price Index starting from 2013. In the absence of a comparable property tax policy change in Maryland around the relevant years, we utilize this policy based natural experiment and compare the home value increases in the census tracts along the DC-Maryland border. Our findings reveal that this policy led to an economically and statistically significant increase in estimated home value in DC tracts compared to neighboring tracts in Maryland. Moreover, our results indicate that this effect is even more pronounced in neighborhoods with a majority Black population, thereby highlighting the potential redistributive implications of such tax policies.

A Comprehensive Review of Tax Policy Changes and Tax Revenue in Kenya

Government revenue is crucial for fostering economic growth, especially in emerging economies where financial autonomy matters. Mobilising this revenue is key to achieving the United Nations Sustainable Development Goals (SDGs) focused on productivity and inclusive growth. This study analyses Kenya's tax revenue trends from 2001 to 2021, particularly the impact of tax policy reforms on the tax-to-GDP ratio. The findings reveal a significant increase in Kenya's tax revenue from 182,418 million shillings in 2001 to 1,692,662 million shillings in 2021, reflecting the effectiveness of tax reforms. It notes a shift towards direct taxes, which increased both in absolute terms and as a portion of total revenue, indicating improved compliance and administrative efficiency. Key reforms, such as the Tax Modernization Programme and the digital iTax system, enhanced revenue collection by improving compliance and tax base widening. While indirect taxes have traditionally dominated, the gap with direct taxes has narrowed, leading to a more balanced revenue structure. The study also highlights challenges, including political disruptions in 2007 and the economic effects of the COVID-19 pandemic in 2020, emphasising the need for resilient revenue strategies. Ultimately, the research concludes that continuous tax policy reform and improved administrative efficiency are essential for Kenya's fiscal sustainability and broader economic development goals.

The Impact of Property Tax Expectations on Household Asset Allocation

Rational asset allocation is central to household wealth accumulation. This paper employs data derived from the 2019 China Household Finance Survey to methodically examine the influence of property tax expectations on the asset allocation decisions of households. This study finds that the expectation of property tax positively influences both the probability of holding risky financial assets and their proportion of household assets. The percentage of housing assets constitutes a substantial negative moderating factor affecting the relationship between property tax expectation and household investments in risky financial assets. The positive effect of property tax expectations is more significant in eastern China. A definite expectation of property tax causes a precautionary saving effect among households. This study highlights that forming reasonable expectations about property taxes can help households adjust their investment portfolios in advance, diversify their asset allocation, and mitigate the impact of changes in property tax policies.

TAX BUOYANCY IN MAJOR STATES IN INDIA

In the world of fiscal policy, tax elasticity and buoyancy are crucial factors shaping a country's financial health. Tax elasticity measures how much tax revenue changes when national income shifts, showing how flexible the tax system is naturally, without deliberate policy changes. This flexibility helps stabilize revenue, reducing the need for constant tweaking of tax policies. On the other hand, tax buoyancy reflects how tax revenue responds to economic shifts and intentional changes in tax policies. It acts like a gauge, indicating how effectively taxes adjust to economic ups and downs and how well policy decisions influence revenue. Low buoyancy suggests that there might be flaws in the tax system, prompting policymakers to rethink and improve tax strategies to better fit economic realities. For a country like India, where tax revenues are essential for financing public spending, understanding these metrics is critical. The buoyancy coefficient compares the growth of actual tax revenue to national income growth, providing insights into how successful fiscal policies are in boosting tax revenues. Meanwhile, the elasticity coefficient shows how responsive the tax system is to changes in national income, revealing its potential to generate more revenue as the economy grows. Analyzing these metrics gives policymakers a detailed view of fiscal sustainability and economic stability. It helps them make informed decisions when designing tax policies, ensuring that the government can maximize revenue while allowing the tax system to adapt smoothly to economic changes. A balanced approach that considers both elasticity and buoyancy is key for India's fiscal strategy, ensuring a well-coordinated financial performance that aligns with national economic goals. KEYWORDS :- Tax Buoyancy, Tax Elasticity, Fiscal Policy, Tax Revenue, NITI Aayog, RBI (Reserve Bank of India), VAT (Value Added Tax), GST (Goods and Services Tax).

The Rise of Pass-Throughs: an Empirical Investigation

Abstract Almost half of all private employment in the United States is within businesses that do not pay corporate income tax. Instead, business income passes through to the owners’ individual income taxes. This pass-through share of employment has more than tripled since the early 1980s. Using comprehensive, confidential administrative data, this paper highlights five core findings underlying this growth: (1) the rise in pass-throughs is pervasive across industries and states; (2) the pass-through share converges unconditionally across both; (3) entrants’ organisational choices drive 60% of the rise; (4) shifts in firm and organisational dynamics following the 1986 Tax Reform Act show continued effects through the 2000s; (5) organisational forms exhibit high persistence with little life-cycle variation. Our study implies that tax or regulatory policy changes might take decades to manifest fully.

Effect of Tax Policy Changes on Corporate Investment Decisions in Saudi Arabia

Purpose: The aim of the study was to assess the effect of tax policy changes on corporate investment decisions in Saudi Arabia. Methodology: This study adopted a desk methodology. A desk study research design is commonly known as secondary data collection. This is basically collecting data from existing resources preferably because of its low cost advantage as compared to a field research. Our current study looked into already published studies and reports as the data was easily accessed through online journals and libraries. Findings: The study indicated that reductions in corporate tax rates generally lead to increased investment by companies. Lower taxes can free up funds that businesses then use for capital expenditures, research and development, and expansion projects. Conversely, higher tax rates may discourage investment, as they reduce after-tax profits and make certain projects less economically viable. However, the relationship between tax policy and investment decisions is complex and can vary depending on factors such as the overall economic environment, industry dynamics, and the specific details of the tax changes. Overall, though, there is evidence to suggest that tax policy plays a substantial role in shaping corporate investment behavior. Implications to Theory, Practice and Policy: Pecking order theory, agency theory and neoclassical investment theory may be used to anchor future studies on assessing the effect of tax policy changes on corporate investment decisions in Saudi Arabia. Policymakers and corporate leaders should collaborate to design tax policies that align with strategic investment objectives, fostering economic growth, innovation, and market competitiveness. The findings from research studies on the effect of tax policy changes on corporate investment decisions can inform evidence-based policymaking aimed at optimizing tax frameworks for economic resilience and dynamism.

Theoretical and methodological aspects of tax analysis for the company

Tax committees routinely scrutinize the accrued tax payments, assessing their dynamics through data extracted from tax registers, financial and tax reports. This analysis unveils various reasons for non-payment of tax liabilities and pinpoints factors influencing the formation of the tax base. Adhering to the provisions of the Tax Code of the Republic of Kazakhstan is crucial for accurately determining the tax base for each type of tax. The analytical process unfolds in stages throughout the reporting year, enabling the tracking of tax liabilities’ dynamics, identification of unpaid amounts, monitoring changes in tax policy, and evaluating the impact of tax changes on the overall tax burden. In addition, it should be noted that all the work of analysts is aimed at preventing tax offences. As sources of analysis we recommend using primary accounting data, tax accounting data in the form of tax registers, financial and tax reporting. A tax analysis is necessary in order to answer the question of how much the company pays taxes to the budget. Based on the tax analysis data, each manager independently determines the optimal tax burden and, depending on this, takes measures for tax planning. Based on the results of the tax analysis, it is possible to determine which taxes are repaid on time, and, if necessary, develop specific measures to reduce the tax burden. Given the evolving landscape of the digital economy in Kazakhstan, the relevance of studying tax analysis becomes imperative. The article comprehensively explores the essence, purpose, and objectives of enterprise tax analysis, delves into the information support necessary for tax analysis, and proposes a systematic approach to indicators for effective tax analysis.

Uniform agricultural tax abolition and differential household labor supply: Evidence from China's urban household survey

Uniform government public policy has steadily shaped the labor supply from households in the past few decades in China with possible differential impact on each parent. This paper investigates how uniform tax policy change plays differential roles in household's labor supply through government public education spending. Utilizing the exogenous shock from China's agricultural tax abolition in 2005, we find that the abolition results in a reduction in female employment but an increase in male employment. Specifically, a 1% increase of agricultural tax to public revenue ratio in the reference year leads to a 0.485% labor supply reduction and 1.50 fewer hours of work per month for married women, whereas the married men's labor supply increases by 0.191% and their working hours by 1.06 h in a typical urban family with school-going children. The effects are greater on married women with primary school-age children and married men from high-asset households. Our mechanism analysis indicates that public education spending works as a substitute for private education spending and affects the household labor supply through investment in children's human capital. Our findings offer a new perspective on the decreasing female labor supply and the widening employment gap between (married) women and (married) men in the Chinese labor market. The findings suggest that public tax policy could lead to unintended consequences on household's labor supply decisions, and thus exacerbate the gender employment gap in the labor market.

Изменение системы налогообложения крестьян Коми края в XVIII веке

The work deals with the study of changes in the taxation system of peasants of the Komi region in the XVIII century. In place of the household comes the poll system, which has radically changed not only the taxation system, but also the distribution of monetary taxes. The nomenclature of taxes and fees, their dynamics were determined, the specifics of changes in tax policy were revealed, etc. As shown by the study of monetary taxes on the territory of the Komi region (Yarensk, since 1780, and Ust-Sysolsk Uyezds), the peasantry paid poll taxes, quitrent and all kinds of «mundane» monetary taxes in favour of the state. They did not remain unchanged and were constantly increasing. New emergency taxes and fees have been introduced. As a result, it was concluded that the strengthening of the tax press led not only to a deterioration in the economic situation of the peasants, but also activated the population to search for new sources of income.

Implementasi Peraturan Pemerintah Nomor 55 Tahun 2022 tentang Penyesuaian Pengaturan di Bidang Pajak Penghasilan (Dampak Penghapusan Pajak Final terhadap Keberlanjutan dan Pertumbuhan Usaha Mikro, Kecil, dan Menengah)

This scientific work investigates the consequences of eliminating the final tax rate on MSMEs with a focus on the implications for sustainability and growth of this sector. Through a literature review and policy analysis approach, this research describes the effects of changes in tax policy on the level of investment, innovation and competitiveness of MSMEs. By taking these dynamics into account, this research aims to provide in-depth insight into the potential positive and negative impacts of final tax reductions on MSMEs as well as recommendations for implementing sustainable tax policies and stimulating the growth of the MSME sector. This research was carried out using a literature review method which involved theoretical and empirical analysis from various literature sources related to taxation, economic policy and the growth of MSMEs. The literature review identified recent developments in tax policy that lead to economic inclusion, including specific steps taken by the government to support MSMEs. This scientific work highlights the impact of eliminating the final tax rate from 0.5% to 0% on MSMEs with a turnover of under 500 million. The implications of this work provide a clearer view of the elimination of final taxes as a strategic instrument to support inclusive and fair economic growth, as well as providing guidance for policy makers, academics and practitioners in designing tax policies that are responsive to current economic dynamics.

The Increasing Trend in Effective Tax Rates in India: Role of Macroeconomic Factors, Tax Policy Changes and Firm Characteristics

We show that over the last two decades, India’s effective tax rates (ETRs) have increased by 7.8 percent, which contrasts with the downward trend in ETRs for US firms documented by Dyreng et al. (2017). After controlling for changes in firm characteristics, macroeconomic factors, and tax policy changes, our findings show that ETRs increased by 0.37 percent per year during the sample period. Further, we examine the proposition that public firms are more likely to engage in non-conforming tax management than private firms. We observe a stronger upward trend in ETRs among private firms than public firms, consistent with the capital market pressure hypothesis. The permanent book-tax difference is the primary driver of the ETR trend for both private and public firms. Our findings contribute to the recent debate about the trend in ETRs by undermining concerns regarding rising corporate tax avoidance and reinforcing the argument that improved tax efficiency and economies of agglomeration in countries with large domestic markets contribute to higher ETRs. JEL Codes: G38, H25, H26, H32

The Sino-US trade friction would exacerbate global inequalities in achieving SDGs

Trade has given rise to global inequalities in sustainable development, while the occurrence of trade frictions between China and the US has led to changes in the global trade market landscape. Whether these changes will exacerbate disparities in sustainable development between regions remains uncertain. Quantifying the impact of changes in the trade market landscape is of significant importance in accelerating global progress towards sustainable development. Therefore, this article, based on the GTAP 10.0 database and using the GTAP model, calculates the extent to which changes in tax policies affect the global achievement of sustainable development goals (SDGs) by assessing the impact of alterations in trade patterns. The research findings are as follows: (1) The decoupling of China and the US has intensified these inequalities. Economically advanced regions have made significant progress in sustainable development compared to relatively underdeveloped regions, such as the US and Sub-Saharan Africa. (2) Regions closer to China and the US are more affected by changes in trade taxes, with economically advanced regions in close proximity to China and the US benefiting more than those farther away. (3) Environmental aspects of SDGs have shown the lowest growth rates, with marginal variations across different regions. (4) Global inequalities in achieving SDGs primarily stem from inter-regional disparities. Over time, inter-regional inequalities decrease while intra-regional inequalities increase, with underdeveloped regions experiencing higher levels of intra-regional inequality compared to developed regions. The growth in tax rates between China and the US contributes to a comprehensive increase in both inter-regional and intra-regional inequalities. Based on these conclusions, this study aims to provide a scientific basis for promoting global sustainable development and reducing regional disparities in the process.

Exploring Tax Policy Changes and Foreign Direct Investment Inflows in the Indian Economy

The Indian Economy has been witnessing growth since the onset of 21st century at a phenomenal pace in which Foreign Direct Investment inflows has played a significant role. Foreign Direct Investment and taxes are two distinct phenomena where taxes are dependent on the macroeconomic regulatory framework subject to amendments from time to time. Foreign Direct Investment covers a broad perspective where it is affected by numerous macroeconomic and global phenomena. However, it also involves foreign investor’s perception regarding the tax structure of the host country. This paper tries to establish a relationship between taxation and FDI inflows in the context of Indian Economy. This paper further attempts to study the implications of tax structure and its changes in Foreign Direct Investment inflows in Indian Economy. This study explains the significance of taxation as a determining variable in Foreign Direct Investment inflows. Key Words: Foreign Direct Investment, FDI inflows, Taxation, Tax Implications, Tax Structure, Indian Economy.

Effect of Tax Compliance Costs on Tax Evasion by Small and Medium Enterprises

This study examined the effect of tax compliance costs on tax evasion by small and medium scale enterprises (SMEs) in Akwa Ibom State. Survey research design was adopted in realising the objectives of the study. The population (1,887) of the study consists of all SMEs in Akwa Ibom, from where a sample size of 330 was drawn using Taro Yamane model. 330 copies of questionnaire were administered to Accountants and owner/managers of the selected SMEs across the three senatorial districts of Akwa Ibom State. The questionnaire was constructed on a 5-point Likert scale and was analysed using non-parametric tests such as mean, standard deviation and percentages. The questions in the questionnaire centred around tax evasion as dependent variable while independent variables were proxied as cost of registration for tax purposes; cost incurred in engaging tax professionals; complexity in the tax system; cost incurred in keeping books and accounting records for tax purposes; cost incurred in obtaining tax education information and changes in tax policy; time spent for tax purposes and cost implication of such time element. The findings of the study shows that 90% of the respondents agreed that the cost incurred by SMEs in registration for tax purposes is high and that this high costs leads to tax evasion. Also, 91% are in agreed that the complexity in the tax system is the reason why SMEs engage the services of external tax professionals to assist in tax matters and this leads to high compliance cost and the attendant tax evasion. 88% of the respondents agreed that high costs of keeping books and accounting records for tax purpose while those on obtaining information on tax policy is 94%. Also, 93% of the respondents agreed that the time spent by SMEs exclusively for tax purposes encourages tax evasion Finally, 89% of the respondents agree that the combined effect of all costs, other than tax liability, and the time spent in tax processes contributed to tax evasion by SMEs. Based on these findings it was concluded that there is a strong indication that compliance costs greatly affect tax evasion. It was recommended that Government should simplify tax policies in order to reduce compliance costs incurred by SMEs and tax professionals should reduce their charges for SMEs as a way of reducing their compliance costs.

Tax Sheltering Cost Among High-Income Taxpayers: Evidence From an Australian Tax Policy Change

Tax Sheltering Cost Among High-Income Taxpayers: Evidence From an Australian Tax Policy Change

The Endowment Effect: A Behavioural Economic Perspective on Land Use Policy, Environmental Protection and Taxation

This essay explores the implications of the endowment effect in various fields including housing markets, environmental policies, and taxation. This essay clarifies the definition and importance of the endowment effect and inspected related literature on the topic of the endowment effect and the fields of application. In the housing markets, this phenomenon is examined from the perspective of the Chinese rural villager displacement programme. In this situation, the endowment effect is influenced significantly by attachment rooted in emotion, ownership of the property, and the replaceability of houses. In environmental policies, the endowment effect is found to result in disparate assessments of favourable outcomes and adverse consequences in the environment. This introduces the concept of the endowment factor as a tool for policymakers. In the realm of taxation, the endowment effect is discussed in relation to tax salience, influencing public perceptions and responses to tax policy changes. Mitigation strategies for the endowment effect such as vocational training, fair compensation, the use of agents, and providing accessible information are also discussed.