Higher Tax Rates Research Articles

Measuring the Tax Incidence of Social Security Taxes in China: Evidence from a Quasi-Natural Experiment of Tax Collection Entity Shift

Measuring the tax incidence is a classical yet on-going debate in public economics and public finance. It is also an important issue for policymaking because it provides information of the impact of labour costs on firm decisions. However, the incidence varies across different environments, but the existing literature mostly draws on the experience of developed countries, leaving the developing countries under-investigated. To fill the gap in the literature, this study focuses on China’s case. Its significance derives from the fact that China’s rapid-growing economy relies on its massive population and labour migration while its firms are sensitive to its high social security tax rates. Moreover, the identification of the underlying causality can be failed due to selection bias and simultaneity. Thus, this study exploits a quasi-natural experiment of social security tax collection entity shift to unravel the underlying causal link from social security tax burden to the employment and wages. Drawing a large sample of firm-level data of the above-scale firms in the manufacturing sector of China, this study takes an instrumental variable approach and finds out that the social security taxes significantly suppresses wages by 3.08 percent. Whereas lowered wages increase the employment in turn by 5.26 percent, also suggesting that the tax burden is shared by both the employer and the employee. As for heterogeneities, the empirical evidence of this study shows that the cost effect of social security is more significant in China’s coastal regions where the manufacturing agglomeration is higher, in large-scale firms that have annual income more than 50 million yuan per year, and in non-state-owned firms.

Demographics and competition for capital in political economy

We examine the possible impacts of demographics on outcomes of competition for capital in political economy. For this, we develop a multi-region overlapping generations model, wherein public good provision financed by capital taxation is determined by majority vote. When population is growing, younger people represent the majority, whereas when it is decreasing, older people are in majority. We uncover the possible externalities arising from political processes as well as capital mobility and show that an inefficiently high capital tax rate is more likely to emerge in an economy with decreasing population than in one with growing population.

Does GST (Goods and Services Tax) A Game Changer For Indian Auto Companies’ Share Return ? (Event Study Analysis)

The Indian auto industry is one of the largest in the world. The industry accounts for 7.1% of the country's Gross Domestic Product (GDP). Almost 13% of the revenue from central excise is from this sector and claims a size of 4.3% of total exports from India. Despite its contribution to the economy and growth potential, this sector has been combating the hardship of high tax rates for substantially a long period of time now with central excise duty ranging between 12.5% to 30% coupled with introduction of multiple cesses at revenues whims and fancies, most recent being infrastructure cess. The present study focuses on “A Study of Impact of Goods & Services Tax (GST) on Shares return of Indian Auto Companies”. This study aims to find the reaction of Indian Auto Companies Share return with respect to the announcement of GST rates and also tries to test efficiency of the stock market. The performance of stock market and its behavior serves as an indicator of the reactions of the economy of the nation. The Goods and Services Tax is a major tax reform in India which is most likely to boost the economic growth of the country. This expectation of the investors is assumed to be transformed to stock price returns that are either negative or positive. So for GST impact is concerned, here Daily, Monthly and Yearly, pre and post GST implementation share return is taken and different statistical tools applied to find impact of GST n these returns.

UK House Prices and Three Decades of Decline in the Risk-Free Real Interest Rate

Real house prices in the UK have almost quadrupled over the past 40 years, substantially outpacing real income growth. Meanwhile, rental yields have been trending downwards — particularly since the mid-90s. This paper reconciles these observations by analysing the contributions of the drivers of house prices. It shows that the rise in house prices relative to incomes between 1985 and 2018 can be more than accounted for by the substantial decline in the real risk-free interest rate observed over the period. This is slightly offset by net increases in home-ownership costs from higher rates of tax. Changes in the risk-free real rate are a crucial driver of changes in house prices — the model predicts that a 1% sustained increase in index-linked gilt yields could ultimately (ie in the long run) result in a fall in real house prices of just under 20%.

Contribuição social sobre o lucro: diferenciação ou sobrecarga?

A contribuição para seguridade social exigida dos empregadores sobre seus lucros foi prevista pela Constituição de 1988, além do imposto de renda das pessoas jurídicas. Desde que iniciada a sua cobrança, foi exigida de instituições financeiras alíquota superior a dos demais contribuintes. A diferenciação por atividade foi contemplada por emenda constitucional mas surgem dúvidas sobre que justifica tal tratamento desigual. A ampliação das atividades sujeitas a maior alíquota e como esta foi seguida e expressivamente majorada se questiona a fronteira entre diferenciação e sobrecarga.

The Tax Regime in Cameroon and The Responsibilities of Cameroonians Towards Fiscal Tax Allocations

This article is aimed at looking at those legal instruments which spells out the statutory duty and substantive practice of collecting fiscal tax revenue in Cameroon. It discusses and looks at revenue generated though the voluminous measures instituted by the state on citizens, individuals and businesses in Cameroon. Since taxation is a civic and an entitled right to pay taxes through legal work, we look at other growth objectives of the state through fiscal revenue generation without creating a vacuum of financial resources as provided under the law. On the basis of statutory, moral and necessity norms of taxation, the article in fulfilling legal authority, brings out the position of the Cameroonian law and other international justifiable laws to reconcile the legal duty to contribute to the financial tax objectives of the state. The Cameroonian fiscal laws have provided the various kinds of measures which state money can be collected but we advisedly recommend sound measures which can be considered without generating painful, excruciating and biting hard harms suffered by Cameroonians which exist in the fiscal revenue collection process. In order to achieve a reputable tax system in Cameroon, the Cameroonian executive must enhance the practice of taxation in all segments of society through the creation and implementation of new tax dues in areas which are not currently being taxed to avoid huge external debts. Such strict implementation must be based on legal and equitable basis to go forward. Besides, tax officials must conceive and implement new taxes which must be fraternal and trust worthy in an effort to strengthen the new taxing items with the old ones. The tax laws passed in Cameroon should be reformed on a timely basis to ensure that, the tax principles produce social change, ambitious and progressive growth challenges without creating excruciating pains. The national interest must not be damaged with high tax rates comparatively. The people must not be robbed through high taxes because the national VAT rate in Nigeria for 2020 will be at 7.5% while Cameroon currently runs a far higher VAT rate. It is our desire that modern and transparent electronic methods of taxation be adopted in Cameroon for the tax payment procedures. This mechanism will reduce tax collection violence in Cameroon. Electronic advancements and technological methods and other matrices if adopted will improve the tax processes in Cameroon. We strongly recommend for the re-improvement and re-acculturation of electronic infrastructure which will not be circumvented by humans for tepid hypocritical measures. Our tax regime must be change focused with many tax payers well oriented on electronic methods on tax payment. Having a salutary tax system must be necessary to avert the prone challenges of revenue generation in Cameroon. As our tax problems cannot be exhaustively solve today, we must keep looking beyond these problems by trying to assert new changes in the tax system or die trying to develop and initiate new reforms.

Disagreement about Innovations and Endogenous Growth

We study an equilibrium model with disagreement about the likelihood of successful innovations. We show that disagreement stimulates aggregate economic growth and overcomes market failures that would otherwise occur in an equilibrium without disagreement. The higher growth with disagreement comes at the cost of a higher wealth and consumption inequality, as a few entrepreneurs will ex post be successful while most entrepreneurs will fail. Hence, our disagreement model provides a potential explanation for the “entrepreneurial puzzle” in which entrepreneurs choose to innovate despite taking on substantial idiosyncratic risk accompanied by low expected returns. We show that taxes on profits reduce growth because it deters entrepreneurs from innovating, leading to a “Laffer curve” as total tax revenue declines with high tax rates. A flat tax rate does not affect innovation and thus economic growth. A high enough flat tax rate leads to the first best for economic growth, assuming that the government would let all entrepreneurs pursue their way of innovating even though from its point of view many of these ways would seem irrational.

POSITIVE AND NEGATIVE ASPECTS OF LEGALIZATION OF GAMING BUSINESS IN UKRAINE

The article discusses the feasibility of a ban on gambling and the main shortcomings in the legislative regulation of public relations in this area. The causes of criminalization of the activity of gambling business in Ukraine are investigated and legal and practical assessment of the consequences of such criminalization is given. Possible ways of solving the problem of the shadow economy in Ukraine by overcoming illegal gambling business by example of the leading states of Europe are analyzed. The authors highlight the main problematic aspects of the existence of the gambling business outside the law and analyze the determinants that provoke such a gambling business. The authors analyze the main negative and positive aspects of the possible legalization of the gaming industry and its impact on civil society. Bills on legalization of gambling business in Ukraine are also analyzed. The article also examines the positive foreign experience of some foreign countries in legalizing the gambling business. In particular, some aspects of legalization are noted based on the experience of Finland, Sweden and Germany. The authors propose to introduce the experience of these states in the legislative regulation of gambling in Ukraine, in particular with regard to the creation of registers of debtors who would not be allowed to gambling, partial legalization of gambling in non-segregated territories, high license fees for gambling and high tax rates. Also important is the fact that the authors outline the regulatory and legal aspects of regulating gambling in Ukraine, and indicate the types of liability that are currently applied to the said offense. The authors also outline a number of legal conflicts, which are in the legal acts that regulate public relations in the field of gambling. Also relevant to the article is the fact that the authors analyzed the psychological aspect of gambling, which has a negative impact on civil society and noted the factors (determinants) of the said negative phenomenon, which generate and stimulate the development of offenses in this area.

Tournament Incentives and Reserve Management

This paper examines the relation between tournament incentives and reserve management. We find a positive relation between internal tournament incentives and reserve errors, implying that a larger pay gap as a tournament prize induces vice presidents (VPs) to overestimate loss reserves. In other words, a higher tournament prize is associated with conservative loss reserve management. Unlike the literature, we do not find a positive relation between tournament incentive and profits (risk taking behavior). Taken together, the evidence indicates that VPs focus on strong financial health of the firm instead of its profitability. In addition, we find the impact of internal tournament incentives on the reserve error is more pronounced for larger, financially weak and more geographically focused firms, and is mitigated for the firms with higher percentage of claim loss reserve over total liability and paying relatively higher tax rates. Our results also suggest that SOX mitigates the conservative reserve behavior. Finally, we also find that as board independence enhances, VPs induced by promotion-based tournaments become more likely to have conservative reserve behavior.

Tax Evasion and its Effects on the Economy

Tax evasion happens when individuals, organization or agency purposely do not adhere to their tax obligation. The loss of tax revenue caused by tax evasion seriously hampers the proper functioning of the public sector by creating problems in its ability to finance its expenses. The study investigates the opinion of the tax professionals regarding the tax evasion in Nepal with the focus on the factors responsible for the tax evasion and possible remedies to decrease the problem of tax evasion. The main objective of the study is to identify the causes of income tax evasion and assess the impact of tax evasion in Nepal. To collect the information regarding tax evasion in Nepal a well-designed questionnaire with five-point Likert scale has been used. Their opinion reveals that high tax rates, corruption in public sector units, multiple tax rates and inefficient tax authorities are the main causes of tax evasion in Nepal.

The Effect of Innovation Box Regimes on Income Shifting and Real Activity

We study whether innovation box tax incentives, which reduce tax rates on innovation-related income, are associated with tax-motivated income shifting, investment, and employment in the countries that implement these regimes. Using a sample of European and U.S. multinationals' subsidiaries operating in Europe and three income shifting models, we find some evidence that firms shift less income out of relatively high statutory tax rate countries following the implementation of an innovation box. We also find that innovation box regimes successfully increase employment but do not result in significant increases in fixed asset investment. Our study contributes to the literature by evaluating multiple income shifting models and informing the ongoing policy debate regarding the economic effects of innovation box regimes.

A Study on Challenges of Tax Revenue Assessment and Collection in Ethiopia with Reference to Custom and Revenue Authority

Tax is a compulsory payment for the government without the expectation of direct benefit or return from tax payers. The world country’s tax revenue is characterizing by high tax rates and narrow tax base, complex and outdated tax law, unrevised and weak tax administration this leads to challenges on the assessment and collection of tax. Tax system complexity has been an issue of concern for stakeholders in developing and advanced countries (Misrak Tesfaye 2014). This paper focuses on to identify on challenges of tax revenue assessment and collection in Ethiopia with reference to custom and revenue authority. The study was employed by using both descriptive and explanatory research design with quantitative and qualitative methods. The quantitative aspect of the data focused on description of socio- economic variables, tax and business related variables and analysis of relationship among the dependent and explanatory variables of the authority. Explanatory research study is most appropriate because it is more efficient, economical and flexible enough to minimize bias and maximize reliability of the collected data. From this study it is found that the factors regarding the tax collector’s the major one, that faced is lack of experience, lack of motivation, unfairness, partiality, and corruption are some of them(Identified through questionnaire). Regarding tax payers were lack of motivation, lack of adequate knowledge, confidence, willingness, are the major ones. Also the model shows the relationship among the dependent and independent variables are significant.

Forming an effective financial and investment environment in the eu countries-experience for Ukraine

The subject of the research is a set of institutional institutions and organizational and managerial relations that effectively regulate the financial and investment environment in the EU countries, comparing them with Ukrainian realities.The goal of writing this article is to develop practical and scientific-methodicalrecommendations on how to increase the efficiency of using financial and investment potential based on the experience of EU countries. The methodology of thework-system-structural and comparative studies (to understand the logic of thefunctioning of institutions that form the investment environment and the mechanisms of their interaction); monographic analysis (in studying the problems ofattracting investors); historical and economic analysis (in assessing the state andprospects of the European, as well as the Ukrainian economy). Results of work -it is revealed that modern European regulators are aimed at forming a holisticinvestment and financial infrastructure and investment platform at the supranational level. It was proposed to carry out further liberalization of currency regulation in Ukraine in order to transform it into a convenient and efficient electronicautomated currency exchange system and introduce the integration of the domestic depository system into the international depositary clearing system Clearstream.It was noted that the financial and investment environment in Ukraine is blockedand domestic monopolies are interested in this, thanks to lobbying in the Verkhovna Rada of Ukraine and in the executive branch they have distorted financial,investment and currency legislation for their interests and needs. Conclusions-thepresence of a holistic investment and financial infrastructure in the EU countriesis due to the gradual convergence and unification of legislation at the nationallevel to the supranational level. In addition, it is reasonably high investment positions of Ireland in the world and it was proposed to use this experience to createa favorable financial and investment environment in Ukraine. Note that the formation of the financial and investment environment in Ukraine according to European standards is hampered by: oligarchic monopolies, which parasitizes mainly onnatural monopolies; government corruption; confusing and incomprehensible legislation for investors; high tax rates and tax administration system; instability ofthe banking system, the risks of hryvnia devaluation; the insecurity of landagrarian relations; as well as armed conflict in the east of Ukraine.

A review of mining taxes in Africa: Tax burden, the strength of democratic systems and levels of corruption

Background: This article examines features of the tax systems of 19 African countries with material mining operations. Objectives: An interpretive approach is used to explore the implications of a country’s commitment to democracy (according to the Economist Intelligence Unit) and perceived levels of corruption (according to Transparency International) for the tax burden experienced in some of Africa’s mining industries. The scores are contrast with the strength of the jurisdictions’ democratic systems and levels of corruption. Method: Income tax rates, the number of taxes charged and the administrative challenges experienced by taxpayers are used to calculate a composite ‘tax burden score’ for each country. The scores are compared with the levels democracy and corruption reported by the Economist Intelligence Unit and Transparency International respectively. Results: Results suggest that democracies are just as capable of extracting value from taxpayers as authoritarian regimes where legal or electoral challenges to unfair tax policy are less likely. Authoritarian governments do not, however, always have the highest tax rates. Free from the need to invest in democratic systems and social welfare, taxes are levied at a lower rate than in more democratic countries. Taxpayers are, however, more likely to experience administrative challenges when applying the applicable tax laws than would be the case under democracy. The result is a trade-off between value extracted directly in the form of tax and compliance or other regulatory costs. Conclusion: These findings make an important contribution to the tax literature by providing a multi-jurisdictional analysis of tax practice in a seldom-studied context. From a practical perspective, the findings can also inform the tax planning, risk management and reporting practices of organisations with material mining investments in Africa.

KEUNTUNGAN DAN KERUGIAN PENGGUNAAN METODE GROSS-UP DALAM PERHITUNGAN PPh PASAL 21 PEGAWAI TETAP MELALUI ANALISA PERBANDINGAN

This research aims to show a comparative between Gross-Up method with others method to calculate article 21 income tax in order to tax planning action. Moreover, this journal gives a tutorial, how to calculate Article 21 Income Tax, use Gross-Up method in Ms Excel and e-SPT aplication. This research uses descriptive and tutorial method to discuss research questions. The result shows that the implementation of Gross-Up method in calculating article 21 income tax, only gives optimal result if implemented to employees who has salary below company tax rate. Contrary, the result will be minumum if used to employees who have higher tax rate. However, income tax benefit that give to employees can increase a motivation among them.In this study, it is argued that the implementation of Gross-Up method can be optimal in situational cases.

Country Tax Regime And Firm Debt Financing

The ASEAN country’s tax regime can be distinguished into the classical tax regime (Indonesia, Thailand, and Philippines) and integrated tax regime (Singapore, Malaysia, and Vietnam). This paper aims to understand the effect of the different tax regimes to firm debt financing policy. We analyze the effects of different tax regimes using the cross section regression method. The dependent variable is Debt to Equity Ratio, the independent variable is proxied by a dummy variable with the classical tax regime are defined as 1 and the integrated tax regime are defined as 0, and firms’ characteristics, as a control variable: Net Property Plan and Equipment to Total Asset Ratio, One Year Sales Growth, Price to Book Value Ratio, and Earnings before Interest, Taxes, Depreciation and Amortization to Total Asset Ratio. Since the classical tax regime has higher tax rates relative to the integrated tax regime, firm operating in the classical tax regime able to experience the same debt tax saving using lower debt financing relative to firm operating in the integrated tax regime. Keywords: ClassicalTtax Regime; Integrated Tax Regime; Debt Tax Saving; Debt Financing; ASEAN Country

Hospitality Industry in Russia: Key Problems and Solutions

The aim of the present research is to study the condition and development of the Russian hotel market under the crisis. In the course of the present work the methods of systematic approach, economic and statistical analyses, quantitative and qualitative studies have been applied. Such methods allow to reveal the problems and prospects of the Russian hotel market development. The article presents the results of analyzing the state of the Russian hotel market. Authors identified factors hindering the development of the hospitality: worn out and outdated rooms in most hotels; high costs of labor, its training and retraining; high interest rates for financing new hotel development projects; high cost of housing and utility; high land tax rates; high property tax rate. The authors of the research have emphasized the necessity of the holding of the anti-crisis measures, aimed at the adjustment of the approaches to the hotel business management under the condition of the fluctuating market. The top priority steps are: reduce the value-added tax for hotel businesses, reduce the land tax for the hotel businesses, reduce the property tax, reduce the administrative burden on the hotel staff on migration registration of foreign and Russian citizens, create rules for providing hotel services in such a way that they protect the rights of not only consumers, but also hotels. As a result of the research the necessity of reforming the system of interaction between the hotel business and the government has been proved. All authors` references aim at the overcoming the negative tendencies on the Russian hotel market, caused by current crisis.

The physics of governance networks: critical transitions in contagion dynamics on multilayer adaptive networks with application to the sustainable use of renewable resources

Adaptive networks are a versatile approach to model phenomena such as contagion and spreading dynamics, critical transitions and structure formation that emerge from the dynamic coevolution of complex network structure and node states. Here, we study critical transitions in contagion dynamics on multilayer adaptive networks with dynamic node states and present an application to the governance of sustainable resource use. We focus on a three layer adaptive network model, where a polycentric governance network interacts with a social network of resource users which in turn interacts with an ecological network of renewable resources. We uncover that sustainability is favored for slow interaction timescales, large homophilic network adaptation rate (as long it is below the fragmentation threshold) and high taxation rates. Interestingly, we also observe a trade-off between an eco-dictatorship (reduced model with a single governance actor that always taxes unsustainable resource use) and the polycentric governance network of multiple actors. In the latter setup, sustainability is enhanced for low but hindered for high tax rates compared to the eco-dictatorship case. These results highlight mechanisms generating emergent critical transitions in contagion dynamics on multilayer adaptive network and show how these can be understood and approximated analytically, relevant for understanding complex adaptive systems from various disciplines ranging from physics and epidemiology to sociology and global sustainability science. The paper also provides insights into potential critical intervention points for policy in the form of taxes in the governance of sustainable renewable resource use that can inform more process-detailed social-ecological modeling.

Levying carbon footprint taxes on animal-sourced foods. A case study in Spain

Abstract The consumption of some kinds of meat contributes significantly to global warming. Hence, dietary changes towards a decreased consumption of these products might lead to reductions in greenhouse gas emissions. Information campaigns can induce a reduction in meat consumption, but they need time since meat is deeply rooted in our diets. Instruments based on changing prices, such as the levying of taxes, stand out as an effective option. This study aims to estimate the greenhouse gas mitigation potential of implementing consumption taxes on some protein-rich foods in Spain. Data from the Spanish panel of household food consumption for the period 2004–2015 and literature data on the carbon footprint of animal sourced foods were used. An almost ideal demand system with the moving blocks bootstrap method was applied to estimate the elasticities and calculate the consequences for the carbon footprint associated with the consumption of seven animal-sourced foods. The results show that taxes on fish can be the most effective at reducing the total carbon footprint and those applied on pork are the least. The results also suggest that high tax rates on the most polluting products do not always lead to the greatest carbon footprint reduction. Further research should incorporate combinations of taxes on different products together with an analysis of potential regressive effects on other socio-economic issues. However, reducing meat GHG emissions is a global challenge which requires inter-disciplinary collaboration together with political actions.

Inheritance and the Family

AbstractInherited wealth will be of increasing importance in years to come. Yet inheritance taxation is unpopular, and part of this unpopularity is due to family concerns. Such taxation is seen by many as morally problematic because it is taken to violate important family values. In this article, we explore five family arguments against inheritance taxation: firstly, whether we have a right to benefit our children; secondly, whether it is a virtue to benefit one's children; thirdly, whether children have a right to their parent's belongings, due to common ownership; fourthly, whether inheritance taxation may impair a vital sense of continuity and belonging; and lastly, an argument from incentives that appeals specifically to the relation between parents and children. We conclude that none of the arguments provide strong objections against a moderate or even a high inheritance tax rate, at least not when special provisions are made for things like family houses or farms. However, since the arguments all introduce concerns that should be assigned some weight, it would be unjust to abolish inheritance entirely.