Earmarked Tax Research Articles

Project Financing Models for Toll Road Investments: A State-of-the-Art Literature Review

In greenfield toll-road projects, financial sustainability has been a major issue. Many toll roads cannot be operated. Although most of Indonesia's 24 toll road concessions have already been signed by the Toll Road Authority, most of them were caused by financing problems. Three problems have been identified as potential sources of this unsustainability, such as the uncertainty of long-term project revenues, budget constraints provided by the government, and inadequate government support for land acquisitions. This paper aims to investigate the state-of-the-art innovative financing models recently introduced to address financial problems by using a desk study and meta-analysis. The findings are an earmarked tax revenue system, deep discount bonds, take-out financing, tax increment financing, land leases, deferred debts, and private donations.

Learning to save in a voluntary pension system: toward an agent-based model

Mandatory pension systems partially replace old-age income, therefore the government matches additional life-cycle savings in a voluntary pension system. Though the individual saving decisions are apparently independent, the earmarked taxes (paid to finance the matching) connect them. Previous models either neglected the endogenous tax expenditures (e.g. Choi et al., in: Wise (ed) Perspectives in the economics of aging, University of Chicago Press, Chicago, pp 81–121, 2004) or assumed very sophisticated saving strategies (e.g. Fehr et al. in FinanzArchiv Pub Finance Anal 64:171–198, 2008). We create twin models: myopic workers learn (i) from farsighted workers using public information (analytic model) and (ii) also from each other (agent-based model). These models provide more realistic results on saving behavior and the impact of matching on the income redistribution than the earlier models.

Indian Cess Taxes: A Call for Accountability

This piece is an analysis of cess taxes (earmarked taxes) levied by the current government in India. The author argues that the potential of ring-fenced or earmarked taxes is an interesting one in building public trust in the taxation process and accountability structures, but the path is far from smooth.

A local-level evaluation of capacity for health promotion in Lima, Peru: Comas and Callao health center areas utilizing the WHO health promotion capacity profile

Capacity mapping for health promotion in Peru is said to have been done in 2001 and 2010 by the Pan American Health Organization/World Health Organization through a regional exercise, but no specific report is available to examine in detail. This paper reviews the role of what has come to be termed ‘capacity-mapping’ in health promotion in three health center service areas in Peru that are part of a community-based health promotion project partially financed by KOICA. One international capacity mapping tool was used to evaluate the situation of the mentioned services areas, specifically the Health Promotion Capacity Profile, developed by WHO in 2004. Local-level capacity for health promotion was analyzed, and limitations are highlighted. The results of the local-level exercise are discussed and suggestions are made on how to improve the identified components in Lima, Peru that are the most lacking; primarily, the areas of partnerships among public, nongovernmental and private organizations, professional development, and health promotion financing. Community-based interventions such as local health promotion programmes should be encouraged as they foster partnerships and support the strengthening of health promotion education for local staff. In addition, the introduction of an earmarked tobacco tax system could be a solution to the considerable financing issue that also affects local health centers, so that the development of effective and sustainable health promotion programmes can be attained.

The incidence of health financing in South Africa: findings from a recent data set.

There is an international call for countries to ensure universal health coverage. This call has been embraced in South Africa (SA) in the form of a National Health Insurance (NHI). This is expected to be financed through general tax revenue with the possibility of additional earmarked taxes including a surcharge on personal income and/or a payroll tax for employers. Currently, health services are financed in SA through allocations from general tax revenue, direct out-of-pocket payments, and contributions to medical scheme. This paper uses the most recent data set to assess the progressivity of each health financing mechanism and overall financing system in SA. Applying standard and innovative methodologies for assessing progressivity, the study finds that general taxes and medical scheme contributions remain progressive, and direct out-of-pocket payments and indirect taxes are regressive. However, private health insurance contributions, across only the insured, are regressive. The policy implications of these findings are discussed in the context of the NHI.

THE NEW TOLL ROAD FINANCING MODEL DETERMINATION

There are three main problems in Indonesia toll road financing model. First, it is the lack of state budget and delayed funding distribution for land acquisition. The second problem is the lack of financial ability of the winning company which leads to financial closing failure. The third problem is related to the land acquisition process that a special purpose company has to obtain for 100% before it can propose a loan from a bank. Therefore, it is essential to develop a new financial modeling to be implemented in Indonesian toll road development. Seven financial models were identified as having been implemented successfully and effectively. These models are earmarked tax revenue, deep discount bonds, take out financing, tax increment financing, land leases, deferred debt, and private donation. However, these models have never been utilized for toll road projects in Indonesia. Therefore, this research aims to explore those seven financial models and determine the most suitable one to be implemented in Indonesia. Literature review and in-depth interview with the key stakeholders were conducted to collect the data. The results subsequently show that there are four models that have never been implemented in Indonesia. However, the combination of deep discount bond and land leases is the most suitable financing model for Indonesian toll road industry.

Demand and supply of ecosystem services in a Mediterranean forest: Computing payment boundaries

This study assesses the feasibility of a mechanism of payment for ecosystem services to improve the provision of ecosystem services by private forest owners. The range of the potential payment is defined by the opportunity costs of a change in forest management as the lower boundary, and by the willingness to pay of society for the improved supply of ecosystem services as the upper boundary. We assess these two boundaries in four hypothetical management scenarios for Aleppo pine forests in Catalonia (north-eastern Spain): (i) passive; (ii) active timber-oriented; (iii) biodiversity improvement; and (iv) wildfire prevention. The upscaling of the outcomes to the regional level shows that the value of the social demand covers the opportunity costs of the landowner. We argue that these figures prove the feasibility and likely acceptance of introducing a payment for ecosystem services based on an earmarked tax. This study represents an initial step for policy instrument design.

Taxing with Purpose

The Article draws on public choice theory to argue that the manner in which the federal income tax distributes its costs and its benefits undergirds the massive fiscal crises that the federal government is now experiencing. Then, this Article offers recent historical evidence on 1500 state-level taxes to develop a way out of the current tax lawmaking paralysis at the federal level. At present, the federal income tax spreads its benefits widely among large yet diffuse groups, which makes the income tax easy to undermine and difficult to improve. The Article proposes, however, that restructuring the manner in which the federal income tax allocates its costs and benefits can circumvent its self-destructive shortcomings. For this purpose, state-level tax laws offer useful templates. In particular, states earmark tax revenues for specific purposes. That arrangement gives rise to fundamentally different tax lawmaking dynamics than those operating at the federal level. To understand how and why these dynamics succeed, the Article presents evidence on the cost-benefit structure of all state-level earmarked taxes from the 1997-2005 historical period. Analysis of this evidence demonstrates that how state-level earmarked taxes laws assign their costs and benefits relates to how revenue-productive and durable these tax laws are. This conclusion furnishes federal tax policymakers with a promising way of revising the federal income tax code to overcome its current defects. The analysis also opens new lines of research at the neglected intersection of public choice theory and scholarship on legal reform.

Households' willingness-to-pay for improved fish welfare in breeding programs for farmed Atlantic salmon

There is a growing concern about the welfare of farmed fish. Current breeding programs typically focus on profitability through emphasizing fast growth of the fish. This research, however, finds that a representative sample of Norwegian households are willing to pay an increased tax for farmed Atlantic salmon that is selected for traits related to fish welfare. In an Internet survey, a random and representative sample of Norwegian households were asked to choose among breeding programs for farmed Atlantic salmon that differed with regards to costs and the following four traits related to fish welfare; frequency of deformities (Deform), frequencies of injuries (Injur), resistance to Salmon Lice (Lepeophtheirus salmonis) (Lice) and resistance to diseases (Health). The survey participants were given six different choice sets, and in each they chose one of three alternative salmon breeding programs. Two of the alternative breeding programs would give improvements in at least one of the trait attributes and would result in an earmarked tax per household per year. The third alternative was the status quo option, i.e. a zero earmarked tax with focus only on growth enhancing traits and profitability in breeding programs. Based on the estimation results of random parameter logit models mean willingness to pay (WTP) was estimated for all households and for the subsample of households purchasing farmed salmon. The average WTP was higher for the subsample that purchases farmed salmon compared to the full sample. For households that purchase farmed salmon, the average WTP in terms of an earmarked tax for all attributes were significant and highest for Lice (1034NOK/yr), followed by Health (749NOK/yr). The WTP for Deform (282NOK/yr) and Injur (256NOK) were nearly the same. For the full sample of household, the average WTP was significantly different from zero at the 5% level only for Health (613.1NOK/yr) and Lice (951.2NOK/yr). This study provides evidence that there is a high WTP among all Norwegian households to improve the welfare of farmed Atlantic salmon through increased resistance to diseases and Salmon Lice, which may imply less use of medicines and chemicals in the production process. Only households that purchase farmed salmon are willing to pay an earmarked tax to reduce deformities and injuries.

Tourist attitudes towards an accommodation tax earmarked for environmental protection: A survey in the Algarve

Tourist taxes have become increasingly popular worldwide in addressing environmental problems associated with tourism. This paper studies tourist attitudes towards an accommodation tax earmarked for environmental protection in the Algarve, the most important Portuguese tourism destination. A Chi-squared Automatic Interaction Detecting Algorithm (CHAID) is used to segment tourists according to their willingness to pay. This method allowed us to divide respondents into six segments. The dominant one, labelled “typical sun and beach tourists”, shows a low willingness to pay the earmarked accommodation tax. In contrast, the receptivity to this measure is above average in three segments, termed according to their main characteristics as “environmental steward tourists”, “nature oriented tourists” and “frugal tourists”.

A Dirty Word or a Dirty World?

We explored the effect of attribute framing on choice, labeling charges for environmental costs as either an earmarked tax or an offset. Eight hundred ninety-eight Americans chose between otherwise identical products or services, where one option included a surcharge for emitted carbon dioxide. The cost framing changed preferences for self-identified Republicans and Independents, but did not affect Democrats’ preferences. We explain this interaction by means of query theory and show that attribute framing can change the order in which internal queries supporting one or another option are posed. The effect of attribute labeling on query order is shown to depend on the representations of either taxes or offsets held by people with different political affiliations.

Legislation to institutionalize resources for tobacco control: the 1987 Victorian Tobacco Act

To describe the process surrounding the creation of the first organization in the world to be funded from an earmarked tax on tobacco products, the Victorian Health Promotion Foundation (VicHealth), and to outline briefly its subsequent history. The genesis of VicHealth came from an interest of the Minister for Health in the Victorian State Government to address the tobacco problem, and the strategic capacity of Dr Nigel Gray from the Anti-Cancer Council of Victoria to provide a vehicle and help the government to muster support for its implementation. Success involved working with government to construct a Bill it was happy with and then working with the community to support the implementation and to counter industry attempts to derail it. The successful Bill led to the creation of VicHealth. VicHealth has played a creative and important role in promoting health not only in Victoria (Australia), but has been a stimulus for similar initiatives in other parts of the world. Enacting novel advances in public policy is made easier when there is a creative alliance between advocates outside government working closely with governments to develop a proposal that is politically achievable and then to work together to sell it. Health promotion agencies, once established, can play an important role in advancing issues like tobacco control.

Federal Grants, Earmarked Revenues, and Budget Crowd‐Out: State Highway Funding

This paper examines the potential for budget crowd‐out in state highway financing. Highway projects are funded primarily through state earmarked tax revenues and federal highway grants. Theoretically, these two sources of revenues could crowd‐out state general funds, freeing up these funds for other uses. Previous studies of highway funding show little evidence of significant crowd‐out, providing support for the “flypaper effect.” The empirical model of this paper better controls for the endogeneity of federal highway grants and state earmarked highway revenues than previous studies and results suggest little to no crowd‐out. Also, our study concludes that state budgeting decisions in the post‐Intermodal Surface and Transporation Efficiency Act era still support the “flypaper effect.”

“A reappraisal of social security financing”—revisited

Richard Musgrave only touched on Social Security in his seminal book, A Theory of Public Finance (1959), but he addressed the issue directly for a 1980 Washington, D. C. symposium sponsored by the Social Security Administration (Musgrave 1981). The symposium brought together experts to help design a fix for Social Security’s financing problems that would be both effective and acceptable to the public. Musgrave’s contribution, “A Reappraisal of Social Security Financing,” reviewed the financing status of Social Security, explored the nature of the intergenerational compact, and, most pointedly, assessed the merits of the payroll tax as a means of financing Social Security. While acknowledging the importance of having an earmarked tax, Musgrave concluded that the payroll tax was unacceptably regressive and should be replaced by a flat percentage charge on a broadly defined income base. Given the importance of Social Security, solving its financing problems in a politically acceptable fashion remains a high national priority. For almost 70 years, Social Security has raised the living standards of millions of older Americans and markedly increased their sense of economic security. Currently, one-third of elderly households receive more than 90% of their income from Social Security and about two-thirds depend on Social Security for more than half of their retirement income. Social Security benefits keep some 15 million people above the poverty line and J Econ Finan (2008) 32:394–408 DOI 10.1007/s12197-008-9045-3

Socio-economic Factors and Household Health Expenditure

Health is influenced by socio-economic factors like whole life-course, the neighbourhood in which one lives, past socio-economic factors, stress history, diet, income, education and many other factors. In this connection, the present article is a micro-level study based on primary data to find out the impact of income and education on household health expenditure in Orissa. It is found that income and education have positive and significant influence on health. Therefore, to tackle poverty—and, hence, health—it is necessary to consider the individual as well as the community. Community development projects that involve people in improving the local environment can provide a useful vehicle within which a wide variety of approaches can be used. Health planners and administrators may be involved in the planning process of the government to reduce poverty, and adopting policies for more equitable distribution of income. They can also recommend a specific health tax (an earmarked so-called hypothecated tax) devoted to health care. Again, spending more on health services does not necessarily buy better health. It needs efficient management and use of resources. A principle of equality of opportunity for access to services on the basis of need and equal risk, irrespective of ability to pay, should be followed.

Financing Health Promotion in South East Asia - Does it Match with Current and Future Challenges?

Objectives: There is an increasing policy concern over the growing trend of burden of diseases from non-communicable diseases (NCD) around the globe. In response to a call for increase investment in and explore potential role of innovative financing mechanism for health promotion and disease prevention, this multi-country study in South-East Asia Region reviews trend of burden of disease (BOD), expenditure on health promotion, innovative financing experiences, and views of policy stakeholders on innovative financing through a self-administrative questionnaire survey. Methods: Literature review on burden of disease (BOD), financing health care in general and financing health promotion in particular, and expereinces in innovative health care finance, in five selected countreis (India, Indonesia, Nepal, Sri Lanka, and Thailand). A self administered questionnaire survey on policy maker's and key stakeholder's views on health care financing, innovative financing for health promotion were conducted in five selected countries. In-depth interviews with key stakeholders were carried out in some countries. Results: The profile of burden of disease (BOD) indicates advanced stage of epidemiological transition in Sri Lanka, Thailand, and Indonesia towards NCD, whereas Nepal and India are facing dual burden from infectious disease and NCD. National Health Account (NHA) is not well established and maintained in South East Asia Region to reflect level and profile of health expenditure. Limited data indicate very small amount spent on health promotion, mostly on conventional clinical based preventive and health promotion services, rather than social mobilization and reduction of primary risk factors, notably tobacco and alcohol consumption, fatty diets, and sedentary life styles. It is questionable whether the current level and effectiveness of public spending on health promotion can effectively halt the trend of BOD from NCD. Among five selected countries, only Nepal and Thailand have innovative financing from sin tax and from tobacco and alcohol earmarked tax to health. Nepal Health Tax Fund is orientated toward treatment of cancers, while Thai Health Promotion Foundation focuses more on social mobilization and strong campaign against tobacco and alcohol consumption, and healthy lifestyles. Results from the questionnaire survey of policy makers and key stakeholders indicate serious under-funding for health and especially health promotion. In view of current burden from chronic NCD, the government should spend more than double or triple of the current spending level on health promotion. A consensus view emerged in favour of the potential role of earmarked tax from alcohol and tobacco, as most desirable and most feasible sources, across four countries lay a foundation for innovative financing health promotion in these countries. Conclusions: Current level and effectiveness of spending on health promotion in these countries are far from the reality to halt the trend of chronic NCD. Innovative financing for health promotion is one of several policy choices to mobilize additional resources. Policy maker's views consistently confirm the under funding of health and health promotion which requires a significant increase in the current level of spending. A consensus view from policy makers and key stakeholders emerges that earmark tax from alcohol and tobacco is highly desirable and feasible source for health promotion. Policy recommendations: In view of resource constraints, it is recommended to increase value for money of the current health promotion program by addressing primary reduction of risk factors. Mobilize more resources from hazardous products such as tobacco and alcohol is recommended. This movement towards additional resource and efficient spending requires strong political leadership and commitments by countries in this region.

The Willingness to Pay for the Health Care Under Taiwan's National Health Insurance

1. Rationale The earmarked tax of Taiwan's National Health Insurance (NHI) had only been adjusted once since the NHI was launched in 1995. Recently, a new tax rate proposed by the Taiwan's government is 2.5%-4% of monthly household income. Measuring the willingness to pay (WTP) of health care services becomes an important policy concern for both consumers and policy makers to evaluate the new tax policy in Taiwan's NHI. 2. Objectives The objective of this study is to estimate the WTP value of health care services under Taiwan's NHI. To this end, we first estimate the discrete choice demand for health care services, and then simulate the consumer's WTP value of health care services with respect to different NHI coverage plans. 3. Methodology The discrete choice demand for health care services is estimated by the nested multinomial logit model. This estimation allows us to simulate different WTP values of health care services (measured by the Compensating Variations, CVs) for different NHI coverage plans. Data were collected in the central Taiwan through clusters sampling. Face-to-face interviews were conducted from February 1st to March 31st in 2004. A total sample of 1,500 individuals was selected. The effective sample size is 1063 individuals, among whom 265 observations reported illness during the survey period. The completed questionnaire included answers to questions about a wide range of individual-level information. 4. Results The WTP value for the NHI that covers health care from clinics only is approximately NT$43 (US$1.34) per month/per person.The WTP value for the NHI that covers health care from hospitals only is approximately NT$1,102 (US$34.44) per month/per person. The WTP value for the NHI with a comprehensive coverage (health care from both hospitals and clinics are included) is approximately NT$1,157 (US$36.15) per month/per person. 5. Conclusions: The estimate of WTP value for the NHI with a comprehensive coverage is equivalent to a 6.59% of average monthly household income in 2004. The figure 6.59% is much higher than the new tax rate (2.5%-4% of monthly household income) proposed by theTaiwan's government. Our results suggest that the Taiwan's government can increase the new tax rate further in order to make Taiwan's NHI financially more sustainable.

Background information for adopting a policy encouraging earmarked tobacco and alcohol taxes for the creation of health promotion foundations

Background information for adopting a policy encouraging earmarked tobacco and alcohol taxes for the creation of health promotion foundations

Ex Post Evaluation of an Earmarked Tax on Air Pollution

In this paper we do an ex post evaluation of the French tax on air pollution. The revenues of this tax were redistributed to polluters in the form of subsidies to abatement technologies, and the policy is a typical example of an earmarked tax. We use a two-stage estimation procedure on an unbalanced panel data set of 226 plants from three industrial sectors that are some of the main contributors to nitrogen oxide and sulfur dioxide emissions. The results indicate that the overall environmental effectiveness of this particular tax/subsidy scheme can be questioned.

Who Supports Tobacco Excise Taxes? Factors Associated With Townsʼ and Individualsʼ Support in Massachusetts

The authors examined factors related to public support for cigarette taxes: smoking behavior, attitudes about other tobacco control policies, and sociodemographic factors. The authors regressed referendum voting outcomes on sociodemographic characteristics of Massachusetts' 351 towns. Logistic regressions on the surveys of Massachusetts adults (N = 14,000+) showed support for hypothetical tax increases to be related to respondents' smoking status, support for other tobacco control policies, and sociodemographic characteristics. Average educational attainment, probably acting as a proxy for nonsmoking prevalence, strongly predicted town-level support for Massachusetts' 1992 cigarette tax referendum. Survey respondents' support for hypothetical further increases was strongest if tax proceeds were earmarked for tobacco control or health purposes and if the individual was a nonsmoker and favored other tobacco control policies. For an earmarked tax, support was stronger among younger persons, females, persons with higher education, racial/ethnic minorities, and smokers with children. The high nationwide proportion of nonsmokers means that tobacco tax proposals can obtain strong voter support, but only if tax revenues are clearly earmarked for tobacco control and similar uses. Individual- and town-level characteristics can identify likely concentrations of support. Because attitudes toward tobacco control are only partly linked to smoking status, education campaigns may make a difference.