Equitable Tax System Research Articles

The application of blockchain technology to improve tax compliance and ensure transparency in global transactions

The digital transformation of global commerce has fundamentally altered the landscape of tax administration, presenting unprecedented challenges for tax authorities worldwide. This comprehensive review examines the transformative potential of blockchain technology in revolutionizing tax compliance and enhancing transparency in global transactions. Through systematic analysis of existing literature, case studies, and implementation frameworks, we investigate how blockchain's core attributes of immutability, traceability, and decentralization can address critical challenges in contemporary tax administration. The review synthesizes evidence from multiple jurisdictions, demonstrating blockchain's capacity to reduce tax fraud, streamline compliance processes, and facilitate real time tax collection. Our analysis reveals that blockchain implementation in tax systems can potentially reduce tax gaps by 75-80% in VAT schemes and decrease compliance costs by 40-50% for businesses operating across multiple jurisdictions. The paper also explores critical challenges, including scalability issues, regulatory frameworks, and implementation barriers, providing a balanced perspective on both opportunities and limitations. Furthermore, we examine emerging trends in blockchain based tax solutions, including smart contracts for automated compliance, cross border information sharing protocols, and real time reporting frameworks. This review contributes to the growing body of literature on digital transformation in tax administration by offering a comprehensive framework for understanding blockchain's role in creating more efficient, transparent, and equitable tax systems. Our findings suggest that while blockchain technology presents promising solutions for tax administration challenges, successful implementation requires careful consideration of technical infrastructure, legal frameworks, and international cooperation mechanisms.

Exploring The Impact of Internet of Things (Iot) Technologies on Tax Compliance: Opportunities, Challenges and Policy Implications

The proliferation of Internet of Things (IoT) technologies has revolutionized various aspects of modern life, including business operations and government services. This research paper delves into the intersection of IoT technologies and tax compliance, aiming to elucidate the opportunities, challenges, and policy implications arising from their integration. Through a comprehensive review and analysis of existing literature, this paper seeks to provide insights into the transformative potential of IoT in tax compliance, while also highlighting potential hurdles and offering policy recommendations. IoT technologies offer a myriad of opportunities to enhance tax compliance processes for both taxpayers and tax authorities. The ability of IoT devices to collect real-time data and automate various tasks can streamline recordkeeping, improve accuracy in reporting, and enable proactive compliance measures. For taxpayers, IoT-enabled systems can simplify tax documentation, minimize errors, and provide timely reminders for compliance deadlines. Likewise, tax authorities can leverage IoT data for better monitoring, enforcement, and risk assessment, thus enhancing overall tax administration efficiency. However, the integration of IoT in tax compliance also presents notable challenges. Privacy and data security concerns emerge as paramount considerations, given the sensitive nature of financial information involved in taxation. The vast amount of data generated by IoT devices also raises questions regarding data governance, ownership, and liability. Moreover, the digital divide may exacerbate existing disparities in access to IoT technologies, potentially marginalizing certain segments of the population and hindering equitable tax compliance. In light of these opportunities and challenges, policymakers must carefully design regulations and guidelines to harness the benefits of IoT while mitigating associated risks. Clear standards for data protection, encryption, and user consent are essential to safeguard taxpayer privacy and instill trust in IoT-enabled tax compliance systems. Additionally, implementation of measures to bridge the digital divide and ensure equitable access to IoT technologies, thereby promoting inclusivity in tax compliance efforts. Furthermore, tax authorities need to develop robust frameworks for data governance, encompassing data collection, storage, sharing, and usage. Collaboration between public and private sectors is crucial to foster innovation in IoT-based tax compliance solutions while adhering to regulatory requirements and ethical principles. In conclusion, the integration of IoT technologies in tax compliance holds immense potential to revolutionize the way in which taxes administered and enforced. However, realizing this potential necessitates a holistic approach that addresses technical, legal, and socio-economic considerations. By embracing innovation while safeguarding privacy and inclusivity, governments can harness the transformative power of IoT to foster more efficient, transparent, and equitable tax systems.

A compliance and audit model for tackling tax evasion in Nigeria

Tax evasion remains a significant challenge for Nigeria, undermining economic stability and reducing public revenue. This paper proposes a comprehensive compliance and audit model designed to address tax evasion in Nigeria. The model integrates enhanced compliance strategies, advanced audit procedures, and the strategic use of technology to create a robust framework for tackling tax evasion. The proposed model emphasizes proactive measures to improve taxpayer compliance through targeted education and outreach programs, streamlined reporting processes, and incentivization. On the audit front, it advocates for the adoption of sophisticated audit techniques and technologies, including data analytics and automated systems, to detect and address evasion more effectively. The implementation framework outlines a phased approach involving key stakeholders such as the Federal Inland Revenue Service (FIRS), local tax authorities, and the private sector. By examining domestic and international case studies, the paper highlights successful practices and potential challenges, providing actionable insights for adapting these strategies to the Nigerian context. Evaluation metrics are proposed to assess the model’s effectiveness, with expected outcomes including improved tax revenue, enhanced compliance rates, and strengthened public trust in the tax system. The study concludes with recommendations for further research and policy adjustments to refine and expand the model's application. This approach aims to not only mitigate tax evasion but also contribute to a more transparent and equitable tax system in Nigeria.

WAYS OF IMPROVING THE METHODOLOGICAL FRAMEWORK OF MASSIVE EVALUATION OF REAL ESTATE IN THE REPUBLIC OF MOLDOVA

This article focuses on researching the methodological development of real estate assessment in the Republic of Moldova, addressing the significant financial losses incurred by local public administrations due to the absence of an updated, appropriate, and transparent assessment system for taxation purposes. The fundamental hypothesis posits that enhancing the methodological and institutional framework of mass appraisal will lead to a progressive evolution of the real estate market relations and the stable development of efficient and equitable tax systems in Moldova. The study aims to identify and propose solutions to current issues in the national mass appraisal system, primarily related to the unavailability of market data and the use of outdated methodologies. Employing scientific techniques such as analysis, deduction, induction, grouping, comparison, analogy, scientific abstraction, synthesis, and statistical methods, the author assess the effectiveness of proposed methodological developments by comparing quality indicators of old assessment models with those developed based on the proposed methodologies. The results obtained support the idea of creating, implementing, and sustaining a mass appraisal system as a foundational element for a fair real estate taxation system, fostering regional development, and supporting economic activities related to the real estate market in the Republic of Moldova.

Reevaluating Ethical Justifications for Discriminatory Tax Rates in the Global Economy

The ethical justification of unequal tax rates remains a heated debate, with recent studies presenting contrasting views. This paper employs utilitarian and deontological perspectives to assess the ethical grounding of discriminatory tax systems. It critically reviews the historical arguments and integrates recent insights to assess the ethical grounding of such systems. After examining the matter from a number of ethical angles, especially considering the most recent studies, the author concludes that there is no definitive moral justification for charging different prices to different individuals. However, newer perspectives highlight the complexities involved in the debate. This paper also explores the practical implications of these ethical perspectives, offering insights for policymakers in designing equitable tax systems in a globalized economy.

On measuring axiom violations due to each tax instrument applied in a real-world personal income tax

In their seminal paper, Kakwani and Lambert (Eur J Polit Econ 14:369–380, 1998) state three Axioms an equitable tax system should respect. By proposing a measurement system based on re-ranking indexes of taxes, tax rates and post-tax incomes, they show how to evaluate the negative influences that Axiom violations exert on the redistributive effect of a tax. By considering each element of a real-world personal income tax, i.e. deductions and tax credits as well as statutory tax rates, in this study we take a theoretical step further by decomposing the magnitude of the three Axiom violations produced by all these tax elements. We propose two complementary strategies. The first one is a ‘stepwise’ decomposition computing the effect of each element of the tax on the redistributive effect when they are sequentially applied; the second strategy is an ‘overall and simultaneous’ decomposition always evaluating the effect of small changes in deductions, tax rates and tax credits with respect to the pre-tax income distribution, once all the three tax instruments have been simultaneously applied. These strategies can be more suitable and effective in measuring the loss of the redistributive effect produced by each tax element because of axiom violations. We also show that they can give different information on the existing inequities of the tax. We finally emphasize the goodness of our approach by applying it to a real world personal income tax.

Examining the Tax Administration Law of Ethiopia in Light of the Tax Compliance Theories

The problem of tax non-compliance is a serious global phenomenon, especially in developing and least developed countries. In this regard, states design their tax administration laws and tax compliance rules in light of the two most dominant tax compliance theories: deterrence theory and behavioural theory of tax compliance. These theories are ideals or indexes of a good tax administration system. It is thus important to examine the base or policy of tax compliance rules of the tax administration laws of Ethiopia. This Article examines when and in what forms the tax administration law of Ethiopia is designed to embody the tax compliance theories. Doctrinal research method is used and the major findings show that –like many countries– the tax administration proclamation of Ethiopia is largely designed in consideration of the economic deterrence model to achieve taxpayers’ compliance which depends on audit and penalties when tax is evaded. However, this approach is criticized due to its administrative inefficiency and its inability to build equitable tax system. Aside from tax penalties, tax administration policies and practice in Ethiopia should give much attention to changing individual taxpayers’ attitudes toward the tax system. This requires improving its perceived fairness and equity, making government expenditure in the best interest of the taxpayers, improving procedural justice, tax education, establishing the culture of mutual respect between tax authorities and taxpayers, and making it easy to comply with the tax laws.

Excise Taxation for Domestic Resource Mobilization

Most governments will have to raise additional resources to deal with the aftermath of the corona crisis. This paper argues that excise duties on drinking, smoking, gambling, sugar-sweetened beverages, plastics, fossil fuels, motoring, telecoms and platforms are the preferred instruments. In nearly all cases, excise duties improve the efficient allocation of resources, while reliance on them is consistent with an equitable tax system. Also, excise duties can be administered more easily than income and value added taxes. Current excise duties are way below efficient levels. It should be possible to triple their yield, especially in developing countries.

PITA 2011 and Voluntary Tax Compliance: Towards Achieving Sustainable Revenue Generation in Kaduna State Nigeria

Sustainable governance entails using the compulsory contribution paid to government by her citizens to support law and order, provide security and social amenities for the benefit of present and future generations. Nigeria's Personal Income Tax Act (PITA) 2011 was amended to provide for sustainable tax policies and administration that would secure voluntary tax compliance and guarantee sustainable revenue generation. The amendment introduced a more equitable tax system by providing realistic tax rates, and recommending an efficient and effective tax administrative system, and simpler tax laws. This study examines the determinants of voluntary tax compliance in Kaduna state Nigeria taking self-assessment, income tax rates, and penalties as provided by PITA 2011, with a view to ascertain whether the Act has significantly affected voluntary tax compliance in the State. The population of study is 4925 registered self-employed individuals who are subjected to Direct Assessment system in Kaduna State, Nigeria. A sample 370 respondents was arrived at using the Yaro Yamani formula. Descriptive statistics and multiple regression technique were used to analyze the data. The study reveals that the amended provisions of PITA 2011 on Self-assessment, Income tax rates and Penalty are capable of enhancing voluntary tax compliance but poor knowledge of the tax laws, unstable economy and administrative bottlenecks have affected the potency of the Act. The study therefore recommends among others that the Kaduna state Government employ measures to boost compliance, such as educating tax payers by summarizing the provisions of PITA 2011 in some widely spoken languages and communicating same.

Tax Secrecy and its Limitations: Is There a Balance?

Economic development in the past decades and the increase of cross-border business by the multinationals coupled with recent financial crisis have brought many questions about whether the taxpayers are paying their fair share. In order to assess the equitable amount of taxes due, revenue authorities often rely on information provided to them by taxpayers. In conducting their procedures, revenue authorities are in principle bound by tax secrecy. However, recently, the tax systems have introduced tax policy instruments with opposing effects, intended to provide full insight in taxpayers’ revenues worldwide and affect the taxpayers’ behaviour towards greater tax compliance. Two such instruments are particularly worth noting, public shaming lists, used primarily nationally, and international exchange of information, as a cross-border procedure. Through comparative legal approach we provide an analysis of legal instruments balancing tax confidentiality and tax transparency. As the research will show, the optimal level of tax secrecy, while preserving international standards of tax transparency, is very difficult, if not impossible, to accomplish. Legal tradition of secrecy, implementation of international standards and the evaluation on the adequacy of such measures should all be taken into account before jumping to any conclusions about the perfect balance. The goal of accomplishing fair and equitable tax system must not be disregarded as well.

Institutional Quality, Taxation and Human Development: The Case of Morocco

The main goal of this article is to explore the relationship between taxation and development in Morocco, particularly among university students in the city of Tetouan. This article analyzes the culture and tax morale in a sample of university students, in order to offer a deeper explanation on the obstacles that hamper the construction of human development in that country. A fairer and more equitable tax system is at the basis of human development. In this sense, this research shows the necessity to restore the relationship and trust of citizens toward their states. The work is organized as follows: first, there is a brief introduction; then the second part raises the theoretical framework of the research. The third part analyzes the data collected through the survey on tax culture and development, and the article concludes with a brief reflection.

Tributação como instrumento de redução das desigualdades no Brasil

O presente artigo tem o objetivo de demonstrar como a desigualdade de renda e de riqueza podem ser reduzidas através de um sistema tributário mais equânime. A tributação baseada sobre os bens de consumo e serviços aumentam as desigualdades de renda, uma vez que a carga tributária atinge significativamente a parcela da população de classe baixa e média. Os seus efeitos regressivos acarretam problemas na distribuição de renda, bem como no acesso aos direitos básicos do cidadão brasileiro. Assim, no primeiro momento, analisar-se-á como é distribuída a carga tributária brasileira, para que, posteriormente, verifiquem-se os princípios da capacidade contributiva e progressividade dos impostos como instrumentos hábeis e eficazes para a redução da desigualdade de riqueza. Em termos gerais, o artigo aborda a real possiblidade de diminuir a concentração de riqueza e desigualdade de renda através da tributação, isto é, tributar mais o patrimônio e renda, diminuindo a incidência sobre os bens de consumo e serviços, respeitando a capacidade econômica do contribuinte.

Meeting the Global Challenges of Doing Business in the Five Candidate Countries on the Road to Join the European Union

The success of indigenous business firms is no longer exclusively an internal process given increasing competition and globalization. Achieving success under dynamic conditions requires active involvement of governments to provide proper environments for local businesses to survive global challenges. Many also want to attract foreign investors to start new businesses. The role of governments is no longer limited to providing preconditions for basic infrastructure needs but now also includes fortifying business environmental factors such as the Internet, legal systems, trained work forces, and equitable tax systems. The purpose of this study is to investigate the conditions in Albania, The Former Yugoslav Republic of Macedonia (FYROM), Montenegro, Serbia, and Turkey. Using the Enterprise Survey from the World Bank, this study evaluates these nations’ adaptation to the global challenges of doing business. These five nations were selected because of their status of potentially joining the European Union (EU). The findings indicate that there are problems and significant gaps among these nations. Suggestions include that national leaders develop policies that go beyond simply addressing the identified obstacles. Additionally, company managers can also use the insights from this study when evaluating these nations as potential EU members before entering these markets.

On Measuring Inequity in Taxation Among Groups of Income Units

In this paper a method for analyzing the fairness of an income tax system when portioning the population into heterogeneous socio‐economic groups is proposed. The equitable tax system is defined by the three axioms given by Kakwani and Lambert in 1998 and, as they suggest, inequity is evaluated by the negative influences on the redistributive effect of the tax associated with axiom violations. Measuring the extent of axiom violations among households belonging to different groups, we improve the Kakwani and Lambert analysis, which is able to detect only the existence of overall inequities. We propose a method that allows for evaluation of the contribution of each group to the overall inequity. Moreover, the adopted method enables disentangling the directions of violations. The obtained results allow us to judge how axiom violations discriminate among groups in their reciprocal relationships. An application to the 2010 Italian income tax reveals that inequities disproportionately penalize the household typologies. More precisely, unfairness affects households with children more severely than the other household groups.

Some considerations on measuring the progressive principle violations and the potential equity in income tax systems

Kakwani and Lambert (1998) state three axioms which should be respected by an equitable tax system; then they propose a measurement system to evaluate at the same time the negative influences that axiom violations exert on the redistributive effect of taxes, and the potential equity of the tax system, which would be attained in absence of departures from equity. The authors calculate both the potential equity and the losses due to axiom violations, starting from the Kakwani (1977) progressivity index and the Kakwani (1984) decomposition of the redistributive effect. In this paper, we focus on the measure suggested by Kakwani and Lambert for the loss in potential equity, which is due to violations of the progressive principle: the authors’ measure is based on the tax rate re-ranking index, calculated with respect to the ranking of pre-tax income distribution. The aim of the paper is to achieve a better understanding of what Kakwani and Lambert’s measure actually represents, when it corrects the actual Kakwani progressivity index. The authors’ measure is first of all considered under its analytical aspects and then observed in different simulated tax systems. In order to better highlight its behaviour, simulations compare Kakwani and Lambert’s measure with the potential equity of a counterfactual tax distribution, which respects the progressive principle and preserves the overall tax revenue. The analysis presented in this article is performed by making use of the approach recently introduced by Pellegrino and Vernizzi (2013).

Taxing for Gendered Economic Justice

Corina Rodriguez Enriquez and Diane Elson argue that the aim to build strong, efficient and more equitable tax system should become a goal for feminism. They propose a framework for analyzing taxation using a gender equality lens that could shape a fair and equitable taxation system.

On measuring violations of the progressive principle in income tax systems

Kakwani and Lambert (Eur J Polit Econ 14(2):369–380, 1998) state three axioms which should be respected by an equitable tax system. Using the Atkinson–Plotnick–Kakwani re-ranking indexes of taxes, tax rates, and post-tax incomes, calculated with respect to the ranking of pre-tax income distribution, they then propose a measurement system to evaluate the negative influences that axiom violations exert on the redistributive effect of taxes. In this paper, we reconsider the way Kakwani and Lambert measure violations of their second axiom, which concerns the re-ranking of tax rates. We construct a non-negative index which is strictly faithful to Kakwani and Lambert’s commands; we show that the Authors’ measure does not exactly fit the statements made in their second axiom. Both Kakwani and Lambert’s original measurement system and the modified one are then applied to Italian personal income tax in 2008. According to the modified measurement system, the average tax rate seems to play a smaller role than that suggested by the results gained using Kakwani and Lambert’s original methodology.

Philippines: Technical Assistance Report on Road Map for a Pro-Growth and Equitable Tax System: Technical Assistance Report on Road Map for a Pro-Growth and Equitable Tax System

Philippines: Technical Assistance Report on Road Map for a Pro-Growth and Equitable Tax System: Technical Assistance Report on Road Map for a Pro-Growth and Equitable Tax System

Tax Administration in Developing Countries: An Economic Perspective

This paper examines the role of tax administration in developing countries from an economic perspective. The traditional separation of tax policy and tax administration in the literature is shown to break down in developing countries, where tax administrators decide in what manner complicated tax legislation should actually be applied. After surveying economic literature dealing with tax administration, the paper offers guidelines on how tax administrators can help implement more efficient and equitable tax systems.

Tax Administration in Developing Countries: An Economic Perspective

This paper examines the role of tax administration in developing countries from an economic perspective. The traditional separation of tax policy and tax administration in the literature is shown to break down in developing countries, where tax administrators decide in what manner complicated tax legislation should actually be applied. After surveying economic literature dealing with tax administration, the paper offers guidelines on how tax administrators can help implement more efficient and equitable tax systems.