Direct Taxes Research Articles

The Impact of Tax Structure on Economic Growth: New Empirical Evidence from Central and Eastern Europe

This study aims to provide new evidence of the impact of total tax revenue and tax structure on economic growth in a sample of eleven European Union (EU) member states located in Central and Eastern Europe (CEE), namely Bulgaria, Croatia, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, and Slovenia. The methods used are description, comparison, synthesis, regression and correlation analysis of annual panel data for the period 2000-2021. The ordinary least squares (OLS) method is used to estimate the parameters of the regression models. The causal relationship between the variables is confirmed by the Granger causality test. The main results indicate that there is a significant negative effect of total government spending on economic growth rate, while the total tax revenue has a positive impact. These findings suggest low efficiency of public spending. The structure of tax systems does not seem to hinder economic growth, as both direct and indirect tax revenues show a positive growth-supporting effect. Only social security contributions are estimated to have a detrimental impact on economic growth. Value added tax and both income taxes (personal and corporate) are found to be growth-conductive, while property taxes and excise duties seem to have no significant impact on the growth rate. Based on the research findings it is obvious that government expenditure is not an effective tool for positive fiscal impact on the economy, so policymakers can support economic growth by decreasing the share of public spending in GDP or by increasing its efficiency. It is recommended to maintain the current ratio between direct and indirect tax revenue, while carefully considering changes to social security systems to promote sustainable and inclusive growth.

Redistribution, Horizontal Inequity, and Reranking: Direct Taxation in the UK, 1977 - 2020

Redistribution, Horizontal Inequity, and Reranking: Direct Taxation in the UK, 1977 - 2020

Free Trade and Tax Efficiency in the West African Economic and Monetary Union: what can we learn for the AFCFTA?

The aim of this paper is to examine the effect of free trade on the tax efficiency of West African Economic and Monetary Union (WAEMU) countries. Specifically, the objective is, on the one hand, to determine the tax efficiency levels of the various taxes, and, on the other hand, to determine the influence of the common external tariff and trade openness on the tax efficiency of the various taxes in WAEMU countries. Using panel data over the period from 1980 to 2019, a stochastic tax frontier model is estimated to determine tax efficiency scores. A censored Tobit model is then used to assess the effect of free trade on the tax efficiency of countries. The results show respective average tax efficiency scores of 75.494%; 3.355%; 69.312% and 60.336% for total tax, direct tax, indirect tax and tax on foreign trade in WAEMU. In addition, the common external tariff and trade openness positively influence the tax efficiency of countries. However, the interaction between free trade and structural transformation, the quality of tax administration and income inequality reduce the tax efficiency of taxes. Decision-makers need to urgently take into consideration the structural transformation of economies, and the improvement of the efficiency of tax administrations in order to benefit from the application of the AfCFTA.

Tax System Reform as a Challenge to Economic Reform: A Case Study of Jordan

Governments care about the tax system and pay attention to it not as a tool for collecting money, but rather as a tool of economic reform, so that taxes achieve their financial, economic and social goals, and then achieve tax justice and protect the poor and middle class. Thus, this study came to investigate the effect of the tax revenue structure in Jordan on economics reform indicators (per individual income growth rate, public debt, openness trade, and inflation) as a challenge to the economic reform. The study population consists of the public sector of the ministries and public sector departments responsible for preparing the general budget and the Jordanian Department of Statistics, with the aim of relying on data issued by them during the time period 1990-2019. Multiple regression models were used to study hypotheses. The research results showed that direct tax (income and profits tax) in Jordan did not significantly affect the economic reform indicators, while there was a negative significant impact at a significance level (á ≤ 0.05) of sales tax on the economic reform indicators. Additionally, the study found that there is no significant effect of indirect taxes (property tax and foreign trade) on economic indicators relative to GDP represented in per individual income growth rate, public debt, and inflation. Among the recommendations of the study is that Jordan must develop the country’s public revenues from its own resources in order to reduce dependence on foreign debt.

An extended variant of the IO model for the study on indirect and direct taxes

Since the input - output (I.O) system was created by W. Leontief, there have been many models expanding from the I.O model such as inter-regional I.O model, inter-national I.O model, social accounting matrix (SAM), demographic - economic model... The I.O model describes and analyzes the flow of products through inter-industrial relationships or the initial distribution process of the economy. The inter-regional I.O model not only reflects inter-industry relationships but also reflects inter-regional relationships, it allows determining the advantage of one region over another in which industries? The social accounting matrix and economic demographic model not only model describes the initial distribution process but also describes the redistribution process. This study extends the I.O model with a harmonious blend of the concept of social accounting matrix and economic demographic model to see that the economy is like a cycle of reincarnation in Buddhism about "no beginning and no end"; any change (Cause) at any stage directly or indirectly affects (Consequences) on the rest.

Налоговые системы и экономический рост в Китае и Индии

The subject of the study is the main directions of economic growth in China and India, whose economies have been rapidly developing over the past few years under the influence of the use of tax instruments that indirectly contribute to such progress. The objectives of the work are to identify, through the prism of taxation, the drivers of economic growth in China and India and to establish tax instruments that contribute to this progress and vectors of their impact. It has been demonstrated that the tax systems of China and India are specifically set up to stimulate the support of industrial policy, the expansion of production capital, the development of the sphere of servants and trade and the volume of their exports, consumer demand. High-tech industries, the financial sector, strategic infrastructure projects, digital technologies, and spatial development of countries are stimulated through tax instruments. It is concluded that the main tax instruments in rapidly growing economies are the gradual transfer of the tax burden to consumption, the provision of benefits to investors, the establishment of reduced tax rates, the presence of "internal offshore", the application of international tax treaties, the absence of excessive tax control. Direct taxes on the income of foreign companies from "digital" services and products are appropriate to equalize the competitive conditions of resident companies.

Taxpayers’ Perceptions Towards Income Tax Administration: A Study from Indian Perspectives

Tax procedures more particularly income tax laws are considered to be more complex and cumbersome by the individual taxpayers. Direct tax constitutes 46.84% of total tax revenue and personal income tax contributes 51.48% of total direct tax in India. Similarly individual taxpayers constitute around 95% of the total taxpayers in India. But individual assesses faces most about compliance challenges and administrative burdens. Governments often introduce new amendments to address these issues and promote economic efficiency. This paper primarily investigates factors influencing tax administration and taxpayer perceptions, particularly in the context of Indian income tax. This analytical study utilizes primary data and focuses exclusively on income taxpayers in Odisha, an Indian state. Despite uniform national tax laws, the study assumes consistency in typical taxpayer behavior across states. To address data collection limitations, nine districts in Odisha with a 2011 census literacy rate above 80% were selected. A structured questionnaire with five-point Likert scale were used to collect responses through random sampling techniques. From the total sample of 1300 respondents, only 1068 provided complete answers. The study’s findings are based on this sample. The research employs Exploratory Factor Analysis (EFA) and Structural Equation Modeling (SEM) to identify significant aspects of tax administration. Three factors emerge: tax procedure, tax services, and tax penalty from factor analysis. Notably, all observed variables have positive impacts on these factors, corroborating the hypotheses, except for one. Tax procedure negatively correlates with tax penalty and services, while services positively correlate with the penalty, resulting in a hypothesis rejection. This study confirms that more the simplification of tax procedures, lesser will be the chance of problems in tax services and chances of imposing penalty.

Податок на прибуток: економічна сутність як об’єкта бухгалтерського обліку та його роль в економіці

The profitable activity of enterprises has economic, fiscal, and social significance within the boundaries of an individual enterprise and the state as a whole because it directly affects the revenue part of the budget due to fluctuations in income tax revenues. The purpose of the article is to clarify the economic content of the concepts of “income tax” and “profit” and to reveal their role in the country's economy based on the analysis of the theoretical views of scientists. The economic essence of the income tax was revealed. Since profit is considered one of the most ambiguous economic categories, the complexity of its definition is due to the variety of interests it covers. It was found that the income tax is: a) a direct tax that enterprises pay to the state budget from the profit received from operational, financial and investment activities; b) a specific fee of the business entity to the state budget for the use of natural, labour, socio-economic resources of the country. It has been established that the social purpose of the income tax is expressed not in the implementation of each of its functions separately but only in the aggregate of all its functions (i.e. regulatory, fiscal, control, economic and social function). Income tax has a dualistic nature, as it is formed in the accounting system based on its principles and methods and tax legislation. It acts as one of the tools for forming a balanced budget for the country and ensuring the efficiency of the development of the country's economy and the activities of enterprises. As an indicator of the efficiency of business activity, profit is subject to income tax. Taxation of enterprises should perform not only fiscal and regulatory but also social and economic functions, act as a means of state support and stimulation of production.

Research of the effectiveness of the system of legal regulation of tax relations for operations with cryptocurrency currently in force

The article deals with the national practicies of direct and indirect taxation of income from cryptoassets in some countries of the world, including Russia, France, Italy, USA, Great Britain, etc. The authors study various approaches to the concept of cryptocurrency for the purposes of fiscal management: macroeconomic, cost, accounting, legal and institutional approaches. According to the authors position cryptocurrencies for tax reasons should be treated as a property and means of payment. Therefore, any income in cryptocurrencies received by taxpayers should be subject to personal income tax or corporate income tax, respectively. The recognition of cryptocurrencies as a means of payment (that is, private money) leads to the need to exempt taxpayers from paying value added tax in cases where cryptocurrencies perform these monetary functions in transactions performed by taxpayers, in particular, they perform the function of a means of payment. Payment of taxes on income of taxpayers received in cryptocurrencies can be carried out both in cryptocurrencies and in national (fiat) currencies. It is permissible to establish a tax declaration of transactions for cryptocurrency. The foundations of the legal regime of taxation of digital currencies in the Russian Federation have been formed. The problems of introducing effective taxation of cryptocurrency transactions in the Russian Federation are identified, as well as changes to tax legislation are proposed, in particular, clarification of the range of objects that can be classified as “digital currency”, synchronization with the law on digital financial assets, determining the tax base and implementing tax control of transactions with cryptocurrency. As the study showed, the approaches to indirect taxation are the most unified. Tax regulation is a potential incentive to reduce the speculative interest of participants in transactions with cryptocurrencies and increase the transparency of taxation of cryptocurrencies.

Collective management of copyright and related rights - fiscal implications

Creative activities are a constant in all the periods and changes that humanity has gone through, they enriched life, improved living conditions and contributed to the progress made in different areas of activity. In today’s highly digitized context, social networks, YouTube, Spotify and Netflix are representative means by which intellectual creations reach the public. In this equation, it is legally required to answer the question how do creators, authors and holders of related rights receive appropriate compensation for the use and exploitation of their works? Collective management organizations provide an answer, they provide a way through which copyright and related rights may be exercised. As a consequence of their contribution to the exploitation of copyright and related rights, collective management organizations also play a fiscal role. Some aspects require clarifications, such as identification of taxable persons, direct and indirect tax applied to the achieved income, as well as non-patrimonial tax obligations.

СПЕЦИФИКА И ОСОБЕННОСТИ СТРУКТУРЫ И ДИНАМИКИ ДОХОДОВ КОНСОЛИДИРОВАННОГО БЮДЖЕТА В РОССИИ

The budget system of the Russian Federation, characterized by the presence of a consolidated budget, including federal, regional and local levels, plays an important role in ensuring the socio-economic dynamics of the country. This study is devoted to the study of the structure and dynamics of revenues of the consolidated budget of Russia in the five-year period from 2018 to 2022. In the context of global economic shifts and nuances of domestic policy, the analysis provides a comprehensive view of the evolution of the Russian budget sector. The main conclusion of this study is the strategic turn of Russia towards the diversification of the revenue side of the budget, which has reduced the historical dependence on the export of hydrocarbons. Such diversification has made it possible to increase the stability of the country’s budget system, especially in the face of external economic shocks. The data indicate a constant increase in both direct and indirect taxes, among which a significant place is occupied by value added tax (VAT), income tax and personal income tax. These tax revenues not only indicate active economic activity, but also reflect the effectiveness of the tax policy pursued in Russia. The fiscal measures taken in response to the unprecedented challenges caused by the COVID-19 pandemic demonstrate the adaptive potential of the State. By providing tax incentives and tax incentives, Russia has demonstrated its commitment to support the business community and minimize the economic consequences of the pandemic. At the same time, the analysis also revealed potential problems related to income inequality, as evidenced by a sharp increase in personal income tax against the background of a static wage fund. In addition, the study traces the relationship between Russia’s budget policy and geopolitical dynamics, especially in the context of foreign policy implications for the budget system. Summing up, we can say that this study is a comprehensive review of the budget trajectory of Russia for the specified period. It highlights the country’s active efforts to diversify its revenue base, overcome economic difficulties and continue the path to creating a balanced and sustainable budget ecosystem. The conclusions made in this report will be useful for politicians, financial experts and scientists interested in the intricacies of the Russian economic and budgetary paradigm. Keywords

PECULIARITIES OF FORMATION OF SIGNS AND PRINCIPLES OF INCOME TAX AS A MANDATORY SOURCE FOR SUPPORTING THE ACTIVITIES OF THE STATE

The article provides an excursion for a detailed study of the role and significance of the elements of income tax. It is the elements of taxation, as noted in the article, that is, the taxpayer, the object and the rate that determine which type of tax to give priority among direct and indirect taxes. The importance of income tax as a source of income for budgets of all levels is analyzed. The factors influencing the growth and reduction of the amount of income tax from enterprises, depending on their location in certain administrative and economic territories, are identified. Specific proposals have been developed to optimize the elements of income tax. At the same time, special attention is paid to the degree of influence of tax incentives on the innovative activity of enterprises.

An Analysis of Gender Equality and Tax Policies in Zimbabwe

This paper analyses the relationship between gender equality and tax policies in Zimbabwe. It focuses on direct and indirect taxes, and explicit and implicit gender biases in the current tax system. The study under review used desktop research and a gender-disaggregated tax-incidence analysis to find that Zimbabwe’s tax laws do not have any explicit bias against women. However, indirect taxes like value-added tax, informal taxes and trade taxes, which make up 60 per cent of all tax revenue, have implicit biases against women that are hard to see. Tax data needs to be genderdisaggregated to ensure that the total revenue mix is fair to women and supports gender-transformative tax policies, both in terms of how revenue is raised and how it is spent. To increase revenue and reduce implicit bias against women, the government must close loopholes for illicit financial f lows, increase progressive taxes, evaluate incentives, and eliminate harmful incentives.

Impact of China’s Local Government Competition and Environmental Regulation on Total Factor Productivity

In the transition of China’s economy toward high-quality development, it will be increasingly important to coordinate the relationship between local government competition, environmental regulation, and the transformation of the economic growth mode. To explore the impact of local government competition and environmental regulation on total factor productivity (TFP), in this study empirical analysis models were established using panel data of 30 provinces in China from 2001 to 2017. Local government competition was measured from the perspectives of foreign direct investment (FDI), fiscal expenditure, and tax. The results show that local government competition has a positive impact on the improvement in TFP. Taking environmental regulation into consideration, the impact of local government competition on TFP is weakened. Furthermore, under the current intensity of environmental regulation, local government fiscal expenditure competition and tax competition both lead to improvement in TFP, while FDI competition has the opposite effect. This paper explores the heterogeneity of the impact of local government competition and environmental regulation on TFP under different local government competition levels. Under the influence of environmental regulations, local government FDI competition has a negative impact on the improvement in TFP, particularly in “low” FDI competition areas. Local government fiscal expenditure competition has a positive impact on the improvement in TFP, particularly in “low” fiscal expenditure competition areas. The current level of local government tax competition has a negative impact on the improvement in TFP in “high” tax competition areas, whereas it has a positive impact on the improvement in TFP in “low” tax competition areas.

TAXATION AND PUBLIC ADMINISTRATION: EXPERIENCE OF ANCIENT GREECE

The article analyzes the experience of tax policy formation in ancient Athens in connection with the development of public administration in the ancient era. The importance of studying this scientific problem in the context of Ukraineʼs strategic course towards the European Union is emphasized. The article aims to identify problems related to the experience of tax policy in Ancient Greece in connection with the strategy of public administration in ancient Athens. It is noted that the economic relations and tax policy of the ancient Greeks were closely linked to the specificities of citizenʼs social life in ancient Hellas. The concepts of freedom, slavery, and the polis decisively influenced the concept of the tax system implemented in Athens in the 5th – 4th centuries BCE. It is emphasized that various models of tax systems were applied in different historical periods within ancient Attica. During the tyranny of Peisistratos and his successors, a direct 10% tax, unpopular among citizens, was practiced. Later, in the era of democracy, a complex tax system emerged, combining a direct tax on foreigners (metoikion) and an extraordinary war tax (eisphora). At the same time, social duty (liturgia) played a significant role, serving as an alternative to direct taxation of wealthy Athenians and involving voluntary financing of socially significant projects. The effectiveness of eisphora and liturgia was explained primarily by the high level of civic consciousness among the ancient Athenians, who demonstrated readiness to serve the interests of their polis. The article mentions that in addition to direct and targeted taxes, there existed a system of indirect levies in ancient Athens, which were derived from commercial activities, logistic services, property use, etc. An important invention of the Athenians was a tax model that did not involve maintaining a bureaucratic apparatus. This was achieved by contracting tax collection to private contractors through auctions. It is concluded that a successful tax model could be realized thanks to the excellent self-organization of Athenian citizens, high civic consciousness, and the principles of public administration in tax policy.

ДЕЙСТВИТЕЛЬНОЕ НАЛОГОВОЕ ОБЯЗАТЕЛЬСТВО ОРГАНИЗАЦИИ ПО НАЛОГУ НА ПРИБЫЛЬ: ПРОБЛЕМЫ ТЕОРИИ И ПРАКТИКИ

The subject of the study is the mechanism used by tax authorities to charge income tax to organizations. The relevance of the study is due to the systematic incomplete accounting by the tax authorities in the implementation of tax control of expenses incurred by organizations that overestimate their financial results, leading to the economically unjustified and excessively high direct taxation in all types of economic activity. The purpose of the study is to form a direction for improving the mechanism for calculating corporate income tax used by tax authorities in the implementation of tax control and changing tax practices. The study used an analysis of the legal and regulatory framework, tax practice and economic publications on the mechanism of calculating corporate income tax by tax authorities. The result of the study is the conclusion that in the Russian tax systemwhen exercising tax control there is a constant presence of incomplete accounting by tax authorities of expenses incurred by organizations. Such an approach on the part of the state entails an artificial overestimation of profits and economically unjustified excessively high direct taxation. The practice of tax control contradicts the theory of taxation, the conclusions made in economics, the name and economic essence of the income tax. Changes in the practice of profit taxation should exclude arbitrary manipulation with expenses of organizations for tax authorities. The conclusion is made about the need to change the practice of taxation, the importance of the formation by the tax authorities of the actual tax obligations of organizations for income tax based on the actual profit received using the calculation method for the full determination and accounting of all expenses incurred by the taxpayer

Structural Impacts of the Tax System on Economic Growth in the Republic of Armenia

Interactions between types of taxes that form the basis of the tax system of the Republic of Armenia and the Gross value added were analyzed in the article. The main objective of the analysis was to observe the behavioral impacts of different types of taxes: corporate income tax, personal income tax, value added tax and excise tax on the growth of the country's GDP according to their functional significance, the main trends and the most typical aspects of these processes were revealed. In this context, it is very important to identify the amount of financial resources the state collects from the economy and allocates to the state treasury in the form of taxes and fees, as well as the distribution of the tax burden on economic sectors, households and others participating in economic processes. In order to find out the nature of the observed relationships and the directions of influence, the ARDL (autoregressive distributed lag) model was used, the use of which allowed to distinguish both short-term and long-term interrelations between observed indicators. As a result of the given analysis, the positive impacts of indirect taxes and the negative impacts of direct taxes on the economic growth were identified and quantified. Nevertheless, the short and long-term impacts of personal income tax on the economic growth is controversial and ambiguous.

МЕТОДИ ФОРМУВАННЯ ДОХОДІВ БЮДЖЕТУ ТЕРИТОРІАЛЬНОЇ ГРОМАДИ МІСТА: ТЕОРЕТИЧНІ Й ПРАКТИЧНІ АСПЕКТИ

The article examines the theoretical aspects of income formation of the territorial community of the city. Attention is focused on ways of generating income. The author singled out the form, instruments and controls of tax, non-tax, transfer and loan methods of local budget revenue generation. An analysis of the practical application of methods, forms and tools for the formation of budget revenues of the territorial community of the city of Khmelnytskyi based on the amount of revenues accumulated in the budget was carried out. An assessment of the income dynamics of the territorial community of the city in terms of general and special budget funds is provided. The work revealed that the main method of generating city budget revenues is the tax method, the use of which was investigated by the author based on the dynamics of the volume and share of revenues from local and national taxes and fees. When forming the budget income of the territorial community of the city of Khmelnytskyi for 2018–2022. The dominant role of tax revenues in the part of direct taxes (tax on the income of individuals) was revealed. The author emphasized the essential importance of the transfer method in filling the income of the city budget, which in practice is manifested in the receipt by the territorial community of the city of inter-budgetary transfers under the conditions of gratuity and irreversibility in the form of subsidies and subventions. Focused attention on reducing the role of the non-tax method of generating city budget revenues, which is based on the use of opportunities of the territorial community to receive its own non-tax revenues from economic activity. It was emphasized that all methods of income formation of the budget of the territorial community of the city are interconnected, mutually determined and mutually complement each other. It is indisputable that local self-government bodies can successfully maneuver the specified methods of generating city budget revenues in the context of solving their current and strategic tasks for the development of the city community. It has been proven that a detailed analysis of the methods of income formation of the territorial community budget makes it possible to identify potentially important sources of income increase in terms of each of the methods for fully financing the needs of the territorial community of the city.

Application of Autoregressive Distributed LAG Models to Evaluating Malawi’s Tax Revenue Productivity and Tax Administration Reform

This analysis demonstrates the application of autoregressive distributed lag (ARDL) models to gauge tax revenue performance in both the short term and the long term, as well as how to incorporate dummies to gauge changes following a popular semi-autonomous tax authority reform. To measure performance, we estimated tax buoyancy, defined as the percentage change in tax revenue in response to the percentage change in the tax base. Using data from 1979 to 2017 from annual economic reports and the United Nations University Government Revenue Dataset, the results show that personal income tax is the most productive of the direct taxes, while VAT is the most productive of the indirect taxes. However, underperforming customs duties estimates were evidence of deep-seated problems, calling for urgent intervention to curb tax evasion, fraud and corruption. Overall, estimates also suggest that tax revenue productivity improved following the tax reform, although the study could not fully credit the improvement to the reform itself.

An Overview of the Reforms of Personal Income Tax (PIT) in Bangladesh

Bangladesh is a country of about 170 million people. But the tax-GDP ratio is yet to reach the double digit. There are some tax reform efforts already have taken to update the tax policy and tax administration for expected outcome. This paper attempted to review those reform efforts highlighting the personal income tax (PIT) and to summarize the reforms already have done and their implications in the revenue performance. It is an exploratory research and secondary sources of data are used to accomplish this study. After a thorough review of the reform initiatives, this study has got some point like complexity of the tax code, number of tax payers become double in last 5 years but the collected revenue is not proportional to the increased taxpayers. Collection of tax through TDS has increased to almost 60 percent. It implies the enhanced compliance and efficiency of the tax regime. Introduction of e-filing, e-payment, and universal self-assessment have reduced the hassle of taxpayers. Administrative capacity in terms of infrastructure and manpower has increased. All these progressive efforts do not bring any mentionable change in the tax structure of Bangladesh. Ratio of direct to indirect tax is very high i.e., about 30 to 70. Of this low-slung direct tax, contribution of PIT is about 40 per cent. To grow a middle-income country and sustain, contribution of PIT to the tax structure should be increased through appropriate reforms in this field.