Tax Changes Research Articles

2023 Tax Changes

In this note, the author provides an overview of a number of tax changes published on 15 July 2023 regarding, inter alia, the new CO2 quota tax, windfall taxes (on financial institutions, airlines, pharmaceutical companies and securities trading), corporate taxation (loss carry-forwards, liabilities waived in the course of a reorganization or restructuring proceeding, the new development tax allowance, preferential transfers of assets and advertisement costs), VAT (withdrawal from a tax group, claims for input VAT on the acquisition of domestic immovable property by non-residents and the issuance of invoices), and “trusted or reliable taxpayer status”.

The Effects of Changes in Tick Size and Tax Rates on the Tax-Timing Option and the Market Response to Stock Distributions

This study examines how changes in tick size and the differential between short-term and long-term capital gain tax rates affect the market response to the announcement of stock distributions. Prior research finds that a stock distribution increases the volatility of the stock, which in turn increases the value of the stock’s tax-timing option. We show that the minimum tick size established by the exchange where the stock is traded affects a stock’s volatility and, therefore, the value of the tax-timing option and the market response to the stock distribution. We document a stronger relation between the market response and changes in volatility among large distributions than among small distributions. We also find a positive relation between the market response and the tax rate differential, although it is only significant for small distributions. Finally, we show that the relationship between the market response and changes in both volatility and tax rate differential is primarily driven by tax-sensitive institutional investors in the distributing firm.

Relative contributions of indirect taxes and inflation on inequality: What does the Turkish data reveal?

AbstractOne way inflation affects consumption inequality is through its varying impact on the purchasing power of different households. Indirect taxes, which affect commodity price levels, are another effective factor influencing consumption inequality. Turkey is a highly unequal country with a long history of high inflation. Moreover, indirect taxes have been used frequently as a policy tool in the last decades. This study develops a novel approach to examining the relative contributions of household inflation rates and indirect tax changes to real consumption inequality and applies it to the case of Turkey. The analysis is carried out using both household‐level data and artificial panel data created to apply the Shapley and Owen decomposition methods. The findings roughly can be summarized in two points. First, while nominal consumption during the 2003–2019 period became more equal, real consumption inequality increased as a result of price changes during that time. Variations in household inflation rates are the primary source of increased inequality. Second, changes in indirect taxes account for 31% to 68% of the unequalizing effect of price changes, depending on the method used. Results imply that monetary and indirect tax policy mix have been in favor of the rich in this period.

Основные изменения налога на прибыль в 2023 году

В данной статье автор рассматривает изменения по налогу на прибыль . В апреле 2023 года были приняты два Закона - Закон N 159-ФЗ и Закон N 166-ФЗ, положения которых касаются плательщиков налога на прибыль. Первый посвящен признанию расходов на приобретение высокотехнологичного оборудования, произведенного в РФ, второй - льготному налогообложению результатов интеллектуальной деятельности (РИД). Изменения по налогу на прибыль также затронули и доходы от осуществления IT-деятельности. О том, какие именно новшества вводятся и с какого момента, рассказано в данной статье.

Taxation of tobacco, alcohol, and sugar-sweetened beverages: reviewing the evidence and dispelling the myths

The article reviews the large body of evidence on how taxation affects the consumption of tobacco, alcohol, and sugar-sweetened beverages (SSB). There is abundant evidence that demand for tobacco, alcohol,...

Tax wedges, financial frictions and misallocation

We revisit the classical result that in a closed economy the incidence of corporate taxes on labor is approximately zero. We consider a rich general equilibrium framework, where agents differ in the level of their wealth as well as in their managerial and working ability. Potential entrepreneurs go through all the key decisions affected by corporate tax changes: the choice of (i) occupation, (ii) organizational form, (iii) investment, and (iv) financing structure. We allow both for the presence of financial frictions and the traditional tax advantage of debt over corporate equity, which jointly generate misallocation of capital and talent. In this environment we characterize the effects of increasing corporate taxes both analytically and for a calibrated version of the model. We show that this tax increase reallocates production from C corporations to pass-through businesses. Since, due to distorted prices, the latter have higher capital-labor ratios, this reallocation generates a reduction in labor productivity and wages. Furthermore, the corporate tax increase induces some C corporations to reorganize as pass-throughs, which implies more restricted access to external funds and thus a socially inefficient downsizing of production in these firms. Finally, the tax increase causes further misallocation of talent by inducing agents with low wealth relative to their managerial talent to switch from entrepreneurship to being workers, while the reverse happens for agents with higher wealth and lower managerial skills. Overall, we find that both labor and capital bear a large share of the corporate tax incidence, while entrepreneurs are net beneficiaries of the tax change.

Socioeconomic differences in the impact of prices and taxes on tobacco use in low- and middle-income countries-A systematic review.

There is indisputable evidence that increases in taxes that raise tobacco prices reduce tobacco use. Consumption taxes on manufactured tobacco products, however, can be regressive in socioeconomic status (e.g., when the ratio of tax paid to income is lower for higher-income groups than for lower-income groups). Nevertheless, if the poor or less educated are more price responsive, a change in tobacco tax may be progressive in socioeconomic status. Existing reviews clearly indicate that populations with lower income or education are more responsive to tobacco tax and price changes than higher-income and more educated populations in high-income countries. Research pertaining to low- and middle-income countries was, however, limited and inconclusive. We conducted a review of quantitative studies that examined if socioeconomic status modified the association between prices and taxes and tobacco use in low- and middle-income countries. We searched two electronic databases, two search engines, and two working paper repositories. At least two reviewers independently screened articles for inclusion, extracted detailed characteristics, and assessed the risk of bias of each included study. Thirty-two studies met our inclusion criteria. Overall, we found that the evidence in low- and middle-income countries was too limited and methodologically weak to make any conclusive statements. Our review highlights a number of data and methodological limitations in existing studies. The most important limitation was the lack of formal assessment of socioeconomic differences in price responsiveness. Only seven of 32 studies assessed statistically whether own-price effects were modified by socioeconomic status. Many modelling studies have examined the distributional effect of a tax increase on tobacco use, while assuming a strong own-price elasticity gradient in income. The poor were generally assumed to be more responsive to price by a factor of two to five, relative to the wealthy. Although there are theoretical reasons to expect poorer individuals to be more responsive to monetary prices than wealthy ones in low- and middle-income countries, our review provides little empirical support.

The effect of legislated tax changes on the trade balance: Empirical evidence for the United States, Germany, and the United Kingdom

This study uses a narrative account of quarterly discretionary changes in tax liabilities from 1974Q4 to 2018Q2 in a VAR setting to examine whether legislative tax changes affect the trade balance in the US, Germany, and the UK. Six different types of legislative tax changes are considered, including indirect tax changes, personal income tax changes, and business tax changes. The results show that, in general, reductions in aggregated tax liabilities tend to reduce exports in the US and the UK, whereas imports tend to increase, leading to a fall in the net-exports-to-GDP ratio. However, this pattern does not necessarily hold for disaggregated tax changes. Moreover, the results for Germany differ from those for the US and the UK. Overall, the economic magnitude of the estimated effects of tax changes on trade variables is relatively small.

Seattle's sweetened beverage tax implementation and changes in interior marketing displays.

Policymakers aim sugar-sweetened beverage (SSB) taxes at decreasing SSB consumption; however, little is known about their impact on beverage marketing in the retail environment. We assessed changes in interior marketing displays within large food stores before and after the implementation of Seattle's SSB tax. We used Poisson difference-in-difference (DID) models to estimate whether presence and variety of interior beverage marketing displays in Seattle changed from before to after the tax compared to displays in non-taxed comparison area stores, overall, and by beverage type. We found no significant changes in overall SSB or non-SSB interior marketing displays in Seattle versus the comparison area. There was less of an increase in displays for diet soda (DID 0.79, 90% CI 0.65, 0.97), and more of an increase in displays for diet energy drinks (DID 1.78, 90% CI 1.03, 3.09) in Seattle versus comparison area. There was mixed evidence that stores changed interior marketing displays in response to the SSB tax.

FBBVA Lecture 2023. The Importance of Modeling Income Taxes over Time: U.S. Reforms and Outcomes

Abstract The structure of taxes and their burden have undergone large and frequent changes over time. We provide a brief history of U.S. federal income tax reform since the 1960s, calculate effective federal income tax rates for each wave of the Panel Study of Income Dynamics, and discuss how effective taxation changed from 1969 to 2016. We show that most tax regimes are short-lived and that the variation in taxes over time and across groups is large. We also use an estimated dynamic model of couples and singles to show that the various tax regimes that we estimate imply very different labor market and saving behavior. These findings stress the importance of studying and modeling tax changes over time and across groups.

Corporate Tax Changes

This note describes recent developments in Bulgaria, including: the introduction of new EU requirements for the use of corporate tax in the form of State aid for regional development; amendments relating to the tax treatment of food vouchers; an extension of the exchange of information on certain types of income subject to withholding tax; and the introduction of measures to implement Council Regulation (EU) 2022/1854.

Carbon Tax and Behaviour Change: Study in Indonesia

This study reviews the literature on behavior change and outlines how accounting need to take part in encouraging and creating harmony with carbon disclosure. Additionally, accountants must comprehend how the government is attempting to advance this objective through taxation-related measures. One of them is the carbon tax. The company's sensitivity to the potential of a worldwide disaster is anticipated to rise with genuine attempts to minimize the rate of environmental damage. This study employs bibliometric analysis, a systematic technique for assessing printed or digital scientific publications or other forms according to predetermined criteria. Regarding the issue of climate change, altering human behavior is crucial. Keywords: Carbon Tax, human behavior, literature.

Dividend Clientele Hypothesis: An Empirical Test in Emerging Nigeria Financial Market

This study tested the dividend clientele hypothesis of Modigliani and Miller using panel data of quoted manufacturing firms in Nigeria. The purpose was to investigate how dividend clientele effect relates to share prices. The estimated regression model found that changes in dividend payout ratio, retained earnings and tax explained 73.9 percent variation in stock prices of the quoted manufacturing firms. Correlation and multiple regressions were used to test the relationship between variables. Cross sectional data were sourced from financial statement and annual reports of the firms. Based on the analysis of fixed and random effect results, fixed effect was used. From the findings, the study concludes that variation in dividend payout ratio, retained earnings and income tax positively affects the stock prices of the quoted manufacturing firms. The study recommends that relevant authorities should ensure dividend policy framework that will positively affects the share prices of the quoted manufacturing firms

Trade and welfare effects of export tax: Theory and evidence from China's incomplete export VAT rebate

While China was reducing tariffs as part of the WTO accession process, it was also effectively restricting exports in some sectors by reducing the rebates of the value added tax (VAT) for exporters. We use a multi-country multi-sector Ricardian model to examine the extent to which these de facto export tax changes have benefited China and nullified the benefits to the rest of the world of China's trade liberalization. We show that trade liberalization benefited China's trading partners both through an improvement in their terms of trade and through a reallocation of resources from protected imported sectors to exportable sectors. We find that the partial rebate policy of VAT on exports provided a small effect overall on the welfare of China and its trading partners, although some countries lost as much as 2/3 of their gains from China's trade liberalization based on tariffs alone. By solving for China's optimal export taxes, we demonstrate that while certain sectors experienced a movement towards the optimal level of export taxes, others deviated from it. This differential adjustment contributed to the limited welfare effect on China. Interestingly, our results indicate that the export tax policies favored downstream sectors within China.

The “Matthew effect” in rebates: How does VAT rebates allocation affect firm export performance

Changes in Value-Added Tax (VAT) rebate rates affect exports. This paper shows, when financially strapped, the timely and efficient allocation of rebates becomes essential. Using a unique panel of Chinese firms with export and rebates information, we show that delay in rebates has negative but unequal effects on firm exports. Delays in rebates also cause more exit and reduce the product scope. Furthermore, we find a “Matthew effect” in allocating rebates: exporters with tighter financial constraints respond more elastically to a delay in rebates, yet they are also more likely to have a higher delay ratio. Thus, reducing rebates delay to the most constrained firms is more effective than a similar reduction to the least constrained firms. In partial equilibrium, correcting the misallocation in rebates would increase Chinese exports by 35%, while eliminating rebates delay would increase exports by 52%.

Taxes and Growth: New Narrative Evidence from Interwar Britain

Abstract The impact of fiscal policy on economic activity is still a matter of great debate. And, ever since Keynes first commented on it, interwar Britain, 1918–39, has remained a particularly interesting and contentious case—not least because of its high-debt environment and turbulent business cycle. This debate has often focused on the effects of government spending, but little is known about the effects of tax changes. In fact, a number of tax reforms in the period focused on long-term and social objectives, often reflecting the personality of British Chancellors. Based on extensive historiographical research, we apply a narrative approach to the interwar period in Britain and isolate a new series of exogenous tax changes. We find that tax changes have a sizable effect on GDP, with multipliers exceeding 2 within two years. Our estimates provide new evidence on the effects of tax changes, contribute to the historical debate about fiscal policy in the interwar period and are also consistent with the sizable tax multipliers found after World War II.

ENVIRONMENTAL TAXATION IN THE CONCEPT OF SOCIAL RESPONSIBILITY OF CITIZENS

The article is devoted to the study of the impact of humanity on the natural environment and the justification of the sources of the formation of financial resources for the environmental purposes in the context of social responsibility of citizens. It was established that the existing «consumer» system of human interaction with the natural environment is destructive for the noosphere. It was substantiated that the development of humanity and the consequences of its life activities are a key factor in the growth of negative anthropogenic impact on the environment. It was found that the ecological footprint of a person depends on the level of social well-being and population size. The relationship between the ecological and economic development of the country and its impact on the environment was reflected. The dynamics of expenses of the consolidated budget of Ukraine for the protection of the natural environment were presented. The main reasons and consequences of the change in the «plane» of common interests of man, nature and the economy in the process of human evolution have been established. The volume of emissions of polluting substances into the atmospheric air by households in Ukraine was studied. It was established that the system of environmental payments in Ukraine, in connection with the growing anthropogenic impact on the environment and, accordingly, its inhabitants, needs some optimization. The nature of the environmental tax has been clarified, the history of its emergence and the transformation of the content of this category have been investigated. It was established that the system of environmental taxation in Ukraine is ineffective and needs to be optimized, especially in the context of growing social responsibility of citizens in the conditions of increasing anthropogenic impact on the environment. The proposed changes in taxation of producers of environmentally hazardous products and traditional energy resources, as well as their consumers, were outlined. The structure of environmental tax in the context of social responsibility of citizens was proposed. The allocation of funds for environmental purposes was substantiated with an emphasis on the local budgets. An improved model of human «interaction» with the surrounding natural environment was proposed.

The wealthy as a barrier to tax reform

Abstract In the optimal design of tax reform proposals, and in decisions about when and how to recommend them, it is useful to take explicit account of issues of political feasibility. In the United States—and probably around the world—important political barriers work against the enactment of major progressive tax reforms. A close look at US poll and survey data indicates that opposition by the general public is not a significant barrier: large majorities favour progressive taxation in general and favour a number of specific progressive tax changes, including higher top personal income tax rates; higher taxes on corporations; increased taxation of realized capital gains; and taxation of unrealized gains at death. But there exist other serious political barriers against tax reform, including an institutional status quo bias that makes any major policy change (especially any progressive change) very difficult; and strong political opposition from business corporations and wealthy individuals. The best available evidence indicates that nearly all US business firms, and most multi-millionaires and billionaires, oppose practically any sort of progressive tax reform. The best evidence also indicates that these firms and individuals exercise far more influence on policy-making than ordinary citizens do. We mention some possible strategies for dealing with this problem.

Too complex to digest? Federal tax bills and their processing in US financial markets

In this paper, we analyze whether the textual complexity of tax bills affects financial markets. Based on the Flesch-Kincaid grade level of the 32 tax bills identified by Romer (Am Econ Rev 100(3):763–801, 2010)in the period 1962–2003, we assess the relationship between tax bills’ textual complexity and financial markets in various windows around the signing of a bill. Our results show a negative (positive) and significant relationship between the present value of tax bills and changes in the 10-year government bond yields (S &P 500 returns). The magnitude of this relationship increases over time, suggesting that market participants underreact at first and need a couple of days to digest the information contained in the tax bills. This delay can be explained by the textual characteristics of the bills in the case of the 10-year yields as a lower readability partly counteracts the negative relationship for up to three days after the signing of a tax bill. In the case of the stock market, we find similar evidence, but only for a part of the readability measures employed in this paper.

How has the tobacco industry passed tax changes through to consumers in 12 sub-Saharan African countries?

IntroductionTobacco taxation is only effective in reducing consumption when it is translated into higher prices. This study aims to investigate to what extent the tobacco industry (TI) passes tax increases...