Tax Increase Research Articles

Assessment of Socio-Economic and Environmental Impacts of Energy Efficiency Improvements in Multi-Apartment Buildings: Case Study of Lithuania

This research aims to assess the socio-economic and environmental impacts of the Lithuanian long-term renovation strategy, focusing on improvements in the energy performance of renovated multi-apartment buildings in the country. The methodology used in the study is centred on the CleanProd general equilibrium model, which is based on publicly available data from the FIGARO database and Eurostat’s non-financial transaction statistics. The four renovation financing scenarios analysed are represented in the model by changes in the demand for energy resources and construction and other transactions related to the renovation programme. To reflect the dynamic nature of the renovation programme, counterfactual equilibria are sought for each year of the renovation programme. The results revealed that renovation of multi-apartment buildings brings net benefits, including long-term increases in gross domestic products (GDPs) and employment, as well as a decrease in economy-wide greenhouse gas (GHG) emissions, and is aligned with the binding European Union’s energy efficiency target to reduce energy consumption at least by 11.7% in 2030 (in comparison to 2020). The Increase in Taxes on Products scenario is modelled as the most favourable scenario. It assures annual GDP growth by 0.37%, employment growth by 2170 jobs a year, including 606 jobs for young people, and an annual decrease in GHG emissions by 929–1043 ktCO2eq. It is found that the most considerable benefits are received during the renovation of medium-size buildings when construction demand increases by EUR 600,000–800,000 per year and natural gas and district heating demand are reduced by EUR 59,000–187,000 per year. Other scenarios demonstrating different building renovation and energy efficiency support practices, including Costless, Reallocation of Governmental Expenditure, and Governmental Loan, show relevant but slightly lower benefits.

How do corporate tax hikes affect investment allocation within multinationals?

Abstract This paper studies how corporate tax hikes transmit across countries through multinationals’ internal networks of subsidiaries. We build a parsimonious multicountry model to highlight two opposing spillover effects: while tax competition between countries generates positive investment spillover, intra-firm production linkages predict negative spillover. Using subsidiary-level data and exogenous corporate tax hikes, we find that local business units cut investment by 0.5% for a 1% increase in foreign corporate tax. This result highlights the importance of production linkages in propagating foreign tax shocks, as the supply-chain-induced negative spillover dominates the positive spillover effect suggested by the conventional wisdom of tax competition.

Multi-objective optimization of hybrid energy systems using gravitational search algorithm

The depletion of fossil fuel reserves, increasing environmental concerns, and energy demands of remote communities have increased the acceptance of using hybrid renewable energy systems (HRES). However, choosing an optimal HRES from economic, environmental, reliability, and sustainability aspects is still challenging. To solve this challenge, this study introduces a novel multi-objective optimization approach using the Gravitational Search Algorithm (GSA) and non-dominated sorting techniques. The proposed framework addresses four objectives: minimizing the loss of power supply probability, reducing total costs, increasing renewable energy fraction, and lowering CO2 emissions. A carbon tax sensitivity analysis evaluates the system’s economic performance under varying scenarios. Also, the amount of damage caused by the release of carbon dioxide on human health and the ecosystem is examined. In this way, an optimal configuration consisting of wind turbines, photovoltaic panels, and diesel generators is introduced to satisfy the above objectives. Results demonstrate that the GSA outperforms established methods, such as multi-objective particle swarm optimization and non-dominated sorting genetic algorithm II in Pareto front diversity and convergence. In this work, the optimal system achieves an 18.4% increase in renewable energy share, reducing ecosystem and human health damage by 14.2%. Notably, with a 20% increase in the carbon tax, system costs increased by 3%. These findings underscore the potential of multi-objective optimization combined with carbon tax policies to enhance energy system sustainability and affordability.

Associations Between Sugar-Sweetened Beverage Taxes and Weight Outcomes Among US Adolescents.

Given the recent implementation and preemption of sugar-sweetened beverage taxes across the United States, we aimed to evaluate the associations between sugar-sweetened beverage (SSB) taxes and adolescent weight-related outcomes using data on 364,540 adolescents drawn from 1999 to 2021 district Youth Risk Behavior Surveys. We used difference-in-differences models to assess the associations and the potential mediating roles of SSBs, milk, and 100% fruit juice consumption. We found that a one cent per ounce increase in SSB taxes was associated with a 0.26 lower body mass index (P <.01), and a 2.19 (P <.01) and 1.68 (P <.01) percentage point decrease in the probability of being affected by overweight and obesity, respectively. SSB consumption had a mediating role, as tax increases were associated with a 2.45 (P <.01) percentage point decrease in adolescents' probability of drinking any SSB. Milk and 100% fruit juices likely also played a role, as we found changes in their consumption in response to tax increases.

Assessing Cigarette Reduction Tax-Effectiveness in Low Tobacco Expenditure Contexts: An Application to Bolivia.

In this research we show that ambitious increases in tobacco tax rates can substantially reduce tobacco consumption, increase fiscal revenue, and provide net positive social benefits even in contexts of low consumption prevalence and intensity. Low nicotine intake still constitutes a grave disease risk factor, and the effectiveness of tax increases might be questioned if income effects are small. We adapt spatial variation of price methodologies to deal with low prevalence and intensity, censored data, and small samples using the Bolivian case as an illustration. We find an average price elasticity of demand of to . Using our estimates of elasticities, we develop a simulation to anticipate the effects of a 35% yearly increase of the Bolivian specific excise on tobacco starting in 2025. Our estimates show that by 2030, this reform could reduce the consumption of cigarettes by 52.6%, diminish the prevalence of smoking by 30.6%, and increase fiscal revenue by $123 million over six years. Moreover, we estimate that the abated direct medical costs of reduced consumption net of the deadweight loss associated with a tax increase would generate a net social gain of over $100 million in five years.

The impact of goods and services tax increase on economic crime: Evidence from China's tobacco tax hike.

Despite the acknowledged interconnection between socioeconomic environment and economic crime, research on the relationship between Goods and Services Tax (GST) and economic crime is scarce because of their complicated relationship. This study examines the impact of the GST increase on the illicit tobacco trade. Based on China's tobacco excise tax shock in 2015, this study employs a difference-in-difference (DID) method to analyze the impact of the GST increase on economic crime. Panel data used in this research are collected by combining prefecture-level socioeconomic data with smuggling data from 2011 to 2016, including variables such as economic crime, wages, GDP per capita, and population. Economic crime, our core dependent variable, is evaluated by the seized-illegal value of smuggling tobacco (SIVST). In order to estimate the heterogeneity effect of tax hikes by region, we classify prefectures into three groups and add a triple interaction term into the regression model. We find that economic crime will be further elevated in places where it was initially higher, stimulated by the excise tax hike. Specifically, areas with high per capita tobacco smuggling in 2014 showed a significant increase in cigarette crime following the 2015 cigarette excise tax increase. For every 1-unit increase in per capita illicit trade in cigarettes in the region in 2014, the local illicit trade increased by 0.25 units after 2015. Heterogeneity analysis shows that the impact of GST increase on the SIVST among prefectures is more pronounced among the coastal prefectures. At the same time, there is no significant difference between border and central prefectures. To mitigate the adverse effects of GST increases on economic crime, governments should implement measures to combat tobacco smuggling, particularly in regions with prevalent criminal activity. This is especially crucial when policymakers opt to raise tobacco taxes for fiscal purposes or tobacco control initiatives.

Shared occupancy and property tax arrears

AbstractShared occupancy arrangements are on the rise in recent years due to affordability constraints in homeownership. This article examines for the first time the property tax compliance behavior of shared dwellings, where homeowners rent out part of their own homes to tenants. Using administrative property‐level data from Ghana, where homeowners are responsible for tax payments, we reveal that shared dwellings, compared to pure owner‐occupied homes, are more likely to be in tax arrears. The noncompliance of shared dwellings is more sensitive to property tax hikes than pure owner‐occupied homes, and greatest among those in the least affluent geographic areas. These effects are moderated by reciprocity, in that compliance levels are higher in locations closer to public services and amenities. The findings provide new insights for policymakers on the tax compliance effects arising in shared occupancies.

The Results of the Fiscal Control Activity in the Member States of the European Union in the field of VAT

The article presents an analysis of the influence that the results of the control activity obtained by the Member States had on the value-added tax. An important part of the work is dedicated to the activity of international fiscal control due to international cooperation resulting from cross-border economic activities. Analyzing the budgetary control activity carried out by the 28 member states of the European Union during 6 consecutive years, a series of similarities and differences can be noted both in terms of the implementation method and the results obtained. Among the financial obligations taxpayers owe, the proposed econometric analysis focuses on the value-added tax. Thus, to carry out the econometric analysis, we used the dependent variable: VAT related to fiscal revenues, and as an independent variable: additional VAT established, as a result of fiscal control, against the total of additional budgetary obligations resulting from fiscal control activity. The result indicates a statistically valid linear regression model, whereby a percentage increase in the value-added tax established by the tax control activity leads to a 0.14% increase in the total tax revenues collected.

Optimizing ICMS Strategies for E-Commerce in Brazil: Tax Benefits and Profitability Insight

This study aimed to analyze the ICMS in the interstate operations of e-commerce companies, targeting non-taxpayers. The objective was to identify more economically advantageous strategies that would remain compliant with the tax legislation. The economic implications are evident in the use of tax benefits by various states, seeking to attract large companies to their jurisdictions through these incentives. A case study was conducted at a medium-sized company that has experienced significant growth in recent years, driven by both operational expansion and the rise of e-commerce on digital platforms. To carry out this case study, information from the company's tax documents was used, including verification of files and tax ledgers, and calculation of taxes and other reports relevant to the study. The analysis revealed that ICMS has a significant effect on the company's operations, necessitating the implementation of strategies to efficiently and legally reduce the tax burden. To implement these strategies, this study analyzed the tax benefits offered by specific states within the federation to this particular industry segment. By comparing these benefits to the company's operational values, opportunities to reduce the tax burden and increase profitability can be identified. The study demonstrated the potential for substantial cost savings by considering the company's location as the primary focus. These savings could range from 41.9% to 72.5%.

Public support for new tobacco control measures in Poland: A cross-sectional survey 2024.

This study assessed public support for new tobacco control measures in Poland, including a smoking ban on private balconies, regular tobacco tax increases, and a total ban on tobacco sales. A nationwide cross-sectional survey was conducted in 2024 using a computer-assisted web interview (CAWI). The 1080 adults (aged 18-82 years) were interviewed, of which 53% were females. A self-prepared questionnaire included questions on support for various tobacco control measures. The primary outcomes were levels of support for each proposed measure. Attitudes were measured using a 5-point Likert scale, and independent variables included sociodemographic factors and smoking status. The smoking ban on private balconies was supported by 44.1% of respondents, with higher support among older adults, non-smokers, and those with higher education. Support for annual tobacco tax increases was 47.1%, particularly among younger and middle-aged adults, the educated, and non-smokers. A total of 41.8% of respondents declared support for the total ban on tobacco sales. Higher education, non-smoking status, and voluntary smoke-free home rules were significantly associated (p<0.05) with higher support for all three tobacco control measures. There was no significant impact (p>0.05) of the gender, financial status, household size, and location of the place of residence on public support of analyzed tobacco control measures. This study revealed that less than half of adults in Poland declare support for extensive tobacco regulations such as a smoking ban on private balconies, taxation increases, and a ban on tobacco sales. Educational level and smoking status are significantly associated with public attitudes toward tobacco control measures.

IMPACT OF 12% TAX INCREASE ON UNEMPLOYMENT RATE AND ECONOMIC GROWTH: A MACROECONOMIC ANALYSIS OF INDONESIA

The 12% increase in the Value Added Tax (VAT) rate in Indonesia raises concerns about its impact on the unemployment rate and economic growth. This article analyzes the implications of this fiscal policy using a macroeconomic approach and systematic literature review method. The process of coding and visualizing the research results uses Atlas.ti software. The findings suggest that the tax increase has the potential to burden firms, which could lead to a reduction in labor force and increase unemployment, especially in sectors that depend on people's purchasing power. In this situation, higher inflation could erode purchasing power, reduce demand for goods and services, and slow overall economic growth. This research suggests that an increase in unemployment will have a wider negative impact on the economy, as the informal sector tends to be more vulnerable to these fluctuations. Keywords: Value Added Tax (VAT), Increase in VAT rate, Unemployment, Economic growth, Macroeconomic approach.

Regulation and Characteristics of Reserving Budget Funds in Russian Regions

Introduction. The relevance is due to the fact that very little attention is paid to this topic in domestic papers despite the importance of reserving budget funds as an instrument of countercyclical policy and sustainability of regional development. The purpose of the study is to identify the peculiarities of reserve funds regulation in the constituent entities of the Russian Federation, which will allow a better understanding of the motivation and incentives of the authorities and their risk management activities. Materials and Methods. With the help of general scientific methods the analysis of regional laws on reserve fund and budget process and profile governmental resolutions for each subject of the Russian Federation was carried out, the original database on the main features of reserve funds at the regional level in Russia was created. This made it possible to systematize disparate information on various aspects of budget reserves in Russian regions, highlight common features and peculiarities – a step towards improving the institution of reserving funds to ensure regional financial stability. Results. The main features and differences between the reserve fund of the subject of the Russian Federation as a public legal entity and the reserve fund (funds) of the executive authority of the subject are identified. It has been established that the reserve fund of the subject of the Russian Federation as a public legal entity is provided for by legislation in not more than half of the regions of the Russian Federation, while the reserve fund of the executive authority operates in every subject. The sources of the funds are, as a rule, a sharp increase in tax and non-tax revenues during the year and the balance on accounts at the beginning of the year. Areas of expenditures from the fund are usually limited and universal, but depending on the conditions of a particular region they can be diverse. Discussion and Conclusion. The reserve fund of the subject of the Russian Federation remains an unpopular instrument. Unlike the reserve fund of the executive authority, its formation is not necessary, and there is no and spending of funds in the regions. The practical implication consists in the possibility of supplementing the measures of the federal policy of financial stability, as well as in the use of the presented results at the level of a regional administration regarding the experience of other regions in terms of regulation and the practice of formation and of reserve funds.

The impact of environmental protection on urbanization

AbstractThis paper develops a small open Harris‐Todaro model with intersectoral capital mobility and the negative externality of pollution to analyze the effects of the pollution tax on urbanization and GDP. We demonstrate that an increase in the pollution tax leads to a decrease in the level of urbanization. Furthermore, we show that if the ratio of the production value of manufactured goods to GDP is smaller than the ratio of the production value of agricultural goods to GDP, then a rise in the pollution tax results in an increase in GDP.

Changes in retail cigarette price after tax increase: Findings from the 2018-2020 ITC Vietnam surveys.

No longitudinal study has investigated the impact of cigarette tax increases on retail prices in Vietnam. This study aims to describe changes in the purchase price of cigarettes following an excise tax increase from 70% to 75% in January 2019. Data were collected from people who currently smoke cigarettes in the longitudinal ITC Vietnam surveys: 1870 participants in Wave 1 (pre-increase), 1564 in Wave 2 (post-increase), and 1308 in Wave 3 (post-increase). Weighted mean self-reported prices of a cigarette pack (with standard error) were calculated for participants who were successfully followed up across three waves. These mean prices were calculated for domestic and international brands, categorized by specific cigarette brands. Percentage changes in mean prices were also measured, and significant differences in mean prices between follow-up waves (Waves 2 and 3) and the baseline (Wave 1) were assessed using paired t-tests. For brands with very small sample sizes, we used non-parametric tests, specifically the Wilcoxon signed-rank test instead of paired t-tests. The weighted mean price of a cigarette pack remained low and stable: VND 12330 (US$0.54) in 2018, VND 12700 (US$0.55) in 2019, and VND 12120 (US$0.53) in 2020 (1000 Vietnamese Dongs about US$0.04345, at 2018). International brands were substantially more expensive than domestic brands, but prices for both remained constant across all waves. Among domestic brands, Thang Long and Sai Gon showed slight price increases of around 3% and 5%, respectively (p<0.05). Among international brands, no statistically significant increase in mean prices was observed. The retail price of cigarettes remains low, indicating that the slight tax increase was insufficient to raise the current retail price significantly. Therefore, a substantial increase in cigarette prices by adding a specific tax is necessary.

Age-period-cohort analysis of smoking prevalence trends among career military personnel in South Korea.

This study evaluated smoking trends among career military personnel in South Korea. After a tobacco tax increase in 2015, the tobacco control program for career military personnel expanded significantly. This study explores long-term smoking trends among career military personnel through age-period-cohort (APC) analysis within the context of targeted tobacco control policies. This secondary data analysis utilized data from 12052 individuals aged 19--54 years, identified as career military personnel in the Korea Community Health Survey (KCHS) from 2008 to 2022. APC analysis with the intrinsic estimator (IE) method was conducted to address multicollinearity and accurately assess the contributions of age, period, and birth cohort to smoking prevalence. Smoking prevalence significantly decreased among career military personnel, from 46.2% in 2008 to 34.1% in 2022. The highest prevalence of smoking was initially observed in the age group of 22-24 years. Although overall prevalence declined, a slight increase was observed in the age group of mid-30s to early 40s, suggesting that smoking behavior varied across age groups. A significant decrease occurred between 2014 and 2016, with individuals born in the 1970s exhibiting the highest smoking prevalence, and those born after 1980 demonstrating a notably lower smoking prevalence. Although smoking prevalence has declined, the distinct age, period, and cohort characteristics of career military personnel necessitate tailored tobacco control policies that consider the various aspects of military life.

The effect of smokeless tobacco (SLT) excise taxes on SLT use among youth

BackgroundSmokeless Tobacco (SLT) use prevalence among youth in the United States (US) is comparable to youth prevalence of cigarette smoking. However, it is in general understudied compared to cigarettes and draws less attention nowadays compared to e-cigarettes (ECs). AimWe estimate the own- and cross-tax elasticities of SLT use among US youth and explicitly test how SLT use changes in response to taxes on SLT, cigarettes, ECs, and beer. MethodsWe standardized SLT taxes for chewing tobacco, moist snuff, dry snuff, and snus, and computed average SLT taxes. We implemented a logit regression model within the state- and year-fixed effects framework. ResultsA 10 % increase in SLT excise taxes reduced youth SLT use by 4 % (p < 0.01). This result is primarily driven by males, Whites, multiple non-Hispanic races, other races, and individuals living in non-Appalachian states. In addition, a 10 % increase in cigarette taxes increases youth SLT use by 8 % (p < 0.05), suggesting substitutional effects. A 10 % increase in EC and beer taxes reduce SLT use by 0.5 % and 2.4 % (p < 0.01), respectively, suggesting complementary effects. ConclusionRaising excise taxes on SLT products can effectively curtail their usage among the youth population. Furthermore, increasing EC and beer taxes reduces youth SLT use. However, an increase in cigarette taxes leads to an unintended consequence of promoting SLT use among youth. In addition, increasing SLT taxes does not appear to significantly impact the disparities in youth SLT use by whether living in Appalachian states. Future research is needed to assess whether SLT taxes reduce disparities in use by rural/urban divisions.

UK Budget – Did Labour Deliver on Their Promises?

During last summer’s UK elections, the Labour party manifesto included a pledge to address a huge gap in the country’s finances by raising taxes on the wealthy, while sparing “working people” from tax increases. Last month, Chancellor Rachel Reeves laid out Labour’s autumn budget, announcing abolishment of the non-dom rules, as well as increases in capital gains tax rates and employers’ contributions to the National Insurance, among other things. In this Talking Points, Claire Shelemay reviews the most significant changes in the Autumn Budget and examines whether Labour did, in fact, keep their promises.

Development of an input-output CGE model for collaborative management of water pollution reduction and carbon mitigation

Achieving the dual goals of improving water quality and reducing carbon emissions requires a systematic study of the combined effects of economic and environmental policies on industrial systems. A CGE-IWCR model is developed to examine the long-term evolution of industrial economic and environmental responses in the Yangtze River Economic Belt (YREB) under varying levels of carbon and water pollution taxes. The CGE-IWCE model offers several advantages: i) under the dual tax (carbon and water pollution tax) interventions, it can effectively forecast industrial CO2 and water pollution emissions driven by both macro and local factors from 2025 to 2060; ii) it quantitatively captures the interactions between various policy interventions, thereby providing guidance for comprehensive regional policy formulation. It is discovered that in the double-tax scenario, various combinations of carbon and water pollution taxes significantly impact direct carbon emissions and direct water pollution emissions, and from local consumption, imports, and exports in industrial sectors. Among them, the dual pressure of high carbon and water pollution taxes, which significantly raise production costs. In addition, increasing the carbon tax from 10 ¥/tonne to 50 ¥/tonne, the water pollution equivalent (WPE) reduction rate rises from 20.79% to 52.67% with the increase in the carbon tax from 2050 to 2060, when the water pollution tax is low. Between 2025 and 2060, the carbon tax plays a significant role in influencing the total industrial output change rate in YREB. from 2025 to 2060, the water pollution tax will play a more significant role in CO2 reduction in YREB’s industrial sector. The results will offer decision-making support for water pollution reduction and carbon mitigation in the YREB’s industrial sector, quantitatively identify the interactions between the dual taxes, and provide new insights for analyzing the impacts of pollution reduction and carbon mitigation policies.

Corporate taxation and macroeconomic dynamics in a monetary union: the French case

Using a post Keynesian stock-flow consistent (SFC) model with two countries in a monetary union (France and the rest of the euro area), we simulate different institutional configurations and highlight the relative inefficiency of public aid “à la française.” This result can be explained by the absence of any conditionality on the aid and by the context of financialization in which the tax cut is implemented. This observation leads us to question the reduction of public aid in a context of high public debt, the increase of which is limited by the institutional framework of the euro area. A second set of simulations, focusing on the increase in corporate taxes, reveals several results. If companies try to suppress wages in order to maintain profitability, an increase in levies on profits would have very high economic and social costs. To be effective, the introduction of differentiated taxation (higher levies on dividends paid) would have to be accompanied by a major institutional change, involving structural reforms aimed at reducing the importance of the financial sector and promoting productive, sustainable, and socially useful investment.

A DYNAMIC ANALYSIS OF THE IMPACTS OF A CONSUMPTION TAX INCREASE AND A PRODUCTIVITY SHOCK: CALIBRATED FOR THE BRAZILIAN ECONOMY

Objective: Analyze the effects of high consumption tax on key macroeconomic variables. Method: The analysis employs both a Dynamic General Equilibrium (DGE) model and a Dynamic Stochastic General Equilibrium (DSGE) model, calibrated to the Brazilian economy. The models simulate the impact of an increase in the consumption tax on key macroeconomic variables and the impact of a productivity shock in an economy with and without taxation, respectively. Results and Discussion: The results show that an increase in the consumption tax leads to a gradual decline in the capital stock and a sharp reduction in labor supply. Furthermore, productivity shocks have weaker positive effects on investment, output, consumption, and the capital stock in an economy with high taxation compared to one without it. The discussion emphasizes the importance of these findings in understanding the trade-offs between taxation and economic activity. Research Implications/Value: The findings suggest that effective allocation of tax revenues—such as investments in infrastructure, education, and technology—is essential to mitigate the negative impacts of consumption taxes on economic performance and foster long-term productivity and growth.