Tax Levels Research Articles

ПОДАТКОВА СИСТЕМА УКРАЇНИ ТА КРАЇН ЄВРОПЕЙСЬКОГО СОЮЗУ: ПОРІВНЯЛЬНИЙ АСПЕКТ

Introduction. The tax system is one of the main tools of economic policy, which allows to regulate financial flows, stimulate economic development and ensure the stability of public finances. Comparing the tax systems of Ukraine and the European Union countries is important for understanding the ways of integration and adaptation of the Ukrainian economy to European standards, especially considering Ukraine's intentions to join the EU. The purpose of the article. The goal of the research is to identify the peculiarities of the functioning of the tax system of Ukraine and the tax systems of the European Union and, on the basis of a comparative analysis, to identify their positive and negative characteristics. Methods. The research methodology involves the use of a comprehensive approach, which includes the analysis and systematization of sources of scientific and practical literature, regulatory and legal framework and analytical data. The research uses methods of comparative analysis to determine the advantages and disadvantages of the analyzed tax systems, a system approach to determine the conceptual basis of the functioning of the tax system of Ukraine and the EU countries, as well as a method of logical generalization to formulate conclusions. At the same time, the article uses a tabular method to visually present the research results. Results. The article defines the necessity of researching the tax systems of the countries of the European Union and the tax system of Ukraine. It was found that the level of taxation in Ukraine corresponds to the average European indicators. An analysis of rates for value added tax, personal income tax, and income tax in Ukraine and in such countries of the European Union as Germany, Spain, Italy, France, Poland and others was carried out. The analysis showed that Ukraine currently has one of the lowest tax rates for the three main taxes among the European countries under review. It has been proven that there is no ideal taxation system. The main advantages and disadvantages of the investigated tax systems are determined. Conclusions. The importance of forming an optimal taxation system in Ukraine as a key element of the socio-economic development of the country in the conditions of military aggression is proven. The main imperatives for the development of the tax system of Ukraine in the conditions of European integration processes are proposed.

Tax Neutrality Treatment of Investment Funds in the European Union

This article examines the legal consequences and assesses the economic impact of the differing tax treatment of investment funds in Portugal, Germany and Luxembourg before and after the Allianzgi-Fonds landmark decision, by the CJEU. Before the Allianzgi-Fonds decision the Portuguese investment taxation discriminated against foreign investments by levying a withholding tax on foreign compared to domestic investments. The Allianzgi-Fonds decision prohibited this discriminatory treatment. Therefore, our article examines whether the Portuguese CIT exemption extended to non-resident UCITS will lead to tax neutrality treatment of investment funds in the EU. Overall, we confirm that the abolishment of the discriminatory withholding tax can considerably reduce the effective tax levels for cross-border investments. Moreover, the abolishment also diminishes the domestic investment bias. Nonetheless, the results do not confirm the achievement of neutrality.

Coal Phase-Out and Carbon Tax Analysis with Long-Term Planning Models: A Case Study for the Chilean Electric Power System

Large CO2 emissions constitute a significant problem today due to their effect on climate change, and the need to design appropriate energy policies to mitigate their consequences and reduce emissions requires a detailed analysis of one of the main sources of such emissions: the electricity system. Thus, this paper presents a study on the effects of energy policies on decarbonization by comparing the detailed phase-out of coal-fired power plants across a range of cases with the implementation of a carbon tax to meet Nationally Determined Contributions (NDCs). The case study focuses on the Chilean electricity system, using a long-term generation and transmission expansion planning model (GTEP) that incorporates a wide range of generation technologies. The study examines the long-term effects of these policies, including costs, investments, and CO2 emissions, as well as their impact on consumer prices reflected in the marginal costs of the system. The transmission system modeling covers various regions of Chile and significant projections for renewable energy sources. It evaluates three economic scenarios based on generation technology costs, fuel prices, and electricity demand under four different closure schemes and fourteen different carbon tax levels. The results indicate that implementing a carbon tax can be more cost-effective for the system than the implementation of a phase-out schedule for coal plants, taking the form of reduced CO2 emission and overall system costs, with an optimal carbon tax value of 37 USD/tCO2. Additionally, the study reveals significant effects on consumer prices, showing that a carbon tax as an energy policy leads to lower prices compared to a phase-out scheme.

The effect of hydrocarbon prices and CO2 emission taxes on drainage strategies

Secondary recovery methods, such as water and gas injection, are effective and cost-efficient techniques for enhancing hydrocarbon recovery; however, they are highly energy-intensive, leading to a large environmental footprint. This study provides insights into the challenge of balancing high hydrocarbon demand with the imperative to reduce CO2 emissions from production by estimating how drainage strategies change under varying economic parameters and CO2 tax levels. An operator’s choice of drainage strategy is assumed to be the drainage strategy yielding the highest net present value (NPV). This paper simulates the drainage strategy of an under-saturated oil reservoir, utilizing reservoir simulations and incorporating a mathematical model that represents the production processing plant. This yields hydrocarbon production, the energy required, and the resulting CO2 emissions, all incorporated into an NPV based on hydrocarbon prices and CO2 emission taxes. The drainage strategy is then optimized to maximize NPV for various hydrocarbon prices and several levels of CO2 tax on associated emissions. The findings of this study indicate that increasing gas prices favor reducing reservoir pressure below the bubble point pressure, thereby releasing solution gas and leaving oil in the reservoir. Although lower reservoir pressure reduces the energy required for injection, the resulting increase in gas production necessitates more energy for gas compression, ultimately leading to higher emissions when gas prices rise relative to oil prices. Additionally, this study reveals that for facilities well designed for the present injection and production volumes (greenfield scenarios), the impact of CO2 tax is limited, leading to a single optimal drainage strategy. In contrast, less energy-efficient facilities (brownfield scenarios) exhibit a more pronounced need to optimize drainage strategies in response to variation in CO2 tax, and oil and gas prices. This study indicates that for fields with efficient production facilities, the ratio of gas to oil prices is more important for the drainage strategy than CO2 tax levels, as income from production tends to dominate emission taxes. This implies that hydrocarbon prices are more important for CO2 intensity than CO2 taxes, e.g., a gas price increase relative to oil price promotes higher CO2 intensity due to a shift towards more energy-intensive gas production whereas realistic tax levels for CO2 emissions have only a minor impact. Thus, increasing CO2 tax levels is mainly a measure impacting emissions from fields with inefficient production facilities.

Carbon pricing acceptance – the role of revenue recycling among households and companies in Norway

ABSTRACT Effective carbon taxation is essential for achieving the green transition. However, there is typically stiff opposition to carbon taxation due to adverse equity and other impacts. Hence, it is essential to get a better understanding of which factors, including the use of tax revenue, can increase acceptability. To date, stated preference methods, rarely used to analyse this issue, have focused only on households. We conduct two national choice experiment surveys of Norwegian households and companies. The experiments include carbon taxes on transport fuel and associated emission reductions and different revenue recycling options as attributes. We find that both groups are more accepting of higher tax levels if the revenues finance climate change mitigation efforts. There is some heterogeneity among the groups with regard to using revenues to reduce different dimensions of inequality. Simulating policy scenarios, we find acceptance for the highest carbon tax among both groups when the revenues are used both to finance climate change mitigation efforts and to reduce rural-urban inequalities. This policy option points to an acceptable carbon tax close to an estimated level necessary for reaching the most ambitious climate target set by the Norwegian government. In Norway, further research should explore whether an effective carbon tax level could be achieved with modest efficiency loss, while also alleviating inequality.

Modeling, parameter estimation and optimization of fluidized bed-based alternative ironmaking process for CO2 emission reduction

This study presents the development of a comprehensive process model for simulating and optimizing the FINEX process consists of the multi-stage fluidized beds, the melter-gasifier unit, and a gas recycling system. The model is developed using Pyomo, a Python-based open-source software package that provides extensive capabilities for formulating, solving, and analyzing optimization models. It incorporates heat and mass balance equations and captures a wide range of chemical reactions, including the reduction of iron ore by hydrogen and carbon monoxide, the calcination of carbonate materials, the water–gas shift reaction, and coal gasification and combustion. Unknown parameters in the model, such as heat loss in each reactor, the extent of the calcination reaction, and the outlet gas temperature from the melter-gasifier, were estimated to calibrate the model. These parameters were estimated by solving an optimization problem that minimizes the gap between the model and real plant data. The optimized model was employed to investigate various scenarios for minimizing CO2 emissions in the FINEX process. This included assessing the impact of HBI charging rates, iron ore quality, and the integration of a CCUS unit. For each scenario, an optimization problem was formulated to minimize production costs across a range of CO2 tax levels. The optimal solutions revealed the relationships between process economics and CO2 emissions for each variable.

THE ECONOMIC IMPACTS OF IMPLEMENTING NET ZERO POLICIES IN KOREA: A COMBINED TOP-DOWN AND BOTTOM-UP APPROACH

The South Korean government aims to achieve carbon neutrality by 2050. Here, this study analyzed the economic efforts of the net-zero policy by integrating top-down and bottom-up models; The UNIfied Climate Options Nexus (UNICON) within this study aims to create a link between the 26 sectors from the bottom-up model and the 85 sectors of the top-down model. Positive mathematical programming methods were used to ensure consistency between the top-down and bottom-up models within the base year. The study found that the total reduction rate was slightly higher in the integrated model than in the computable general equilibrium (CGE) stand-alone model. In both models, the reduction rate increased when the carbon tax increased, but the marginal reduction rate was considerably lowered, and the reduction rate did not exceed 80% even with the high level of a carbon tax. The technological change of the linked industries in the integrated model showed that the steel industry had the highest emission reduction. When estimating costs for reducing GHGs, results can vary based on the technological changes under consideration.

The failure of the United Kingdom’s accounting and fiscal governance

PurposeThis paper aims to unravel the puzzle that the United Kingdom’s high-quality government accounting and fiscal architecture is associated with low-quality outcomes, including poor productivity growth, high public debt, public services which do not meet citizen expectations and historically high levels of taxation. It contributes to public sector accounting research in the fields of fiscal transparency and governance.Design/methodology/approachThis paper uses Miller and Power’s (2013) economization framework and Dunsire’s (1990) concept of collibration to explain why being a global leader in public sector accounting reform and in fiscal and monetary architecture has not protected the UK from weak governance. The intersection of economization’s roles of accounting with modes of government accounting clarifies the puzzle.FindingsWhereas accruals government accounting contributes to fiscal transparency, this is not a sufficient condition for well-judged policy and its effective application. Collibration is the dominant mechanism for mediation in the fiscally centralized UK, but it has failed to deliver stable outcomes, in part because Parliament is limited in its ability to hold back inappropriate behaviour by the Executive. Subjectivization has disrupted adjudication because governments at all levels resist constraints on their behaviour, with unpredictable and often damaging consequences.Originality/valueThis paper provides insights through the combined lens of economization and modes of government accounting, demonstrating the practical value of this conceptualization. Although some causes for unsatisfactory outcomes are specific to the UK, there are cautions for accounting and fiscal reformers in other countries, such as Member States of the European Union.

High-dimensional private and social optimal policy valuation model for non-renewable natural resource extraction projects for multivariate public policy decisions

We present a model to find the value and sensitivity function associated with the exploitation of a non-renewable natural resource both for the mining company (private optimum) and for the government (social optimum). Improvements over previous studies are achieved by achieving a multivariate model of optimal policy valuation under a Markov decision process with stopping times based on multiple real options, proposing an iterative algorithm of stochastic approximation with supervised dynamic programming decision under Monte Carlo scenarios until obtaining convergence. Applied to a mining project (Tía María) and extended to the total reserves of a country (Peru), it provides additional decision criteria for fiscal public policy, negotiations, concessions, tax levels, community reparations, as well as benefit estimation, discounted from the potential environmental cost in countries abundant in natural resources that wish to achieve sustainability.

Changing carbon footprints and the consequent impacts of carbon taxes and cash transfers on poverty and inequality across years: A Peruvian case study

Carbon taxes are key policies to achieve climate goals. Yet, they increase prices especially in the short term, and can affect households’ income depending on their carbon footprints. Cash transfer programs can be used to address adverse social impacts and protect the poorest. However, because carbon footprints, and the consequent tax impacts, may change over time it is important to understand how to design and adapt such cash transfer programs accordingly. As the existing studies focus on single years, we address the gap in the literature in two steps. First, we estimate changes in carbon footprints and their drivers over time; second, we simulate the effects of a carbon tax in combination with cash transfers on poverty and inequality for the years 2004, 2007 and 2011 in Peru. We combine a bottom-up household carbon footprint estimation, and multiple scenarios simulation. We show that, in a context of rapid economic growth, footprints increase over time, particularly for lower deciles. Most importantly, the distributional impacts of a reform combining carbon tax and cash transfers change by year. The paper concludes that, to maximize poverty and inequality reduction, the design of cash transfer programs and tax levels need to be adapted over time.

Analyzing transformational role of black women entrepreneurs in Brazilian beauty sector

Purpose This study aims to explore the concept of transformational entrepreneurship (TE), which is relevant in emerging economies such as Brazil with its elevated level of unemployment, taxes and interest rates along with elevated levels of institutional voids, and how firms are including purpose as part of their goals and strategies. Design/methodology/approach The study is based on a multiple case study of six Afro-entrepreneurs, participants of a consulting project from Sebrae, the Brazilian Micro and Small Business Support Service, a private entity that promotes the competitiveness and sustainable development of micro and small business enterprises (Sebrae, 2022). Findings This work studied the transformational power of entrepreneurship and how six beauty salons led by black women have the ability to not only generate income but also contribute to social and cultural aspects. Practical implications This work demonstrates how TE has the potential to improve the lives of a population that has historically been marginalized and faces the lived consequences of socioeconomic discrimination. Originality/value This paper provides valuable contributions through a case study of transformational, ethnic and women’s entrepreneurship, not very explored in the literature.

Low-Budget Households in the Conditions of Digitalization in US Regions

The digitalization of the economy and society of the highly developed countries, along with technological improvements in production and social relations, introduces a number of significant problems associated with the widening income gap and the flow of the economically active population from the knowledge economy to the “traditional activity” sectors. The subjective expression of this process in the 21st century Low Budget Families, an increase in the share of which has been observed in the United States during the period of increased digitalization and reindustrialization, starting in 2010. The growth trend of Low Budget Families in the United States has an intra-country spatial nature, quantitatively and qualitatively different both at the level of subregions and individual states of the country. The regional aspects of the relationship between the growth of the share of Low Budget Families, depending on the level of digitalization of the economy and society, reflected through the corresponding “complex index”, considered in the article, find empirical confirmation, generally characterized by a direct dependence and causality associated with the release of an increasingly significant number of labor potential from the advanced sectors of the economy. The problem of the flow of economically active citizens, who represent the basis of Low Budget Families in which the level of official income, taxes, consumption and savings is declining, is being solved differently in different US states. Based on a comparison of the criteria for identifying Low Budget Families, a priority for the authorities of various regions of the country, a general “spatial picture” of polarization of subregions and states is formed based on the share of Low Budget Families, depending on the level of digitalization and the choice of directions of state regional policy to smooth out the negative problems of inequality and hidden employment, caused by the digital transformation of social relations.

Impact of Mandatory Audits of Small- and Medium-Sized Enterprises on Their Income Tax Compliance: Evidence from the Egyptian Small- and Medium-Sized Enterprise Stock Market

Small- and medium-sized enterprises are essential to the economies of nearly all countries, as they directly influence the GDP and tax revenue. In 2019, the European Federation of Accountants and Auditors for SMEs surveyed SME account users, revealing that tax authorities were the most common recipients of the company’s accounts, accounting for 61.40% of cases. This study, from a macroeconomic perspective, aims to uncover evidence of the impact of mandatory audits of Egyptian SMEs on their income tax compliance. It also seeks to explore the Egyptian SME tax environment to fill the knowledge gap by exploring perceptions of SMEs’ tax performances and their levels of tax. This study provides evidence that the taxpayers’ tax compliance behavior is an essential and decisive factor in the compliance of Egyptian SMEs with income tax. The results show that SME management is less persuaded by the potential benefits of mandatory audits on tax compliance than auditors and academics. Also, the study found experimental evidence confirming that the mandatory auditing of SMEs positively impacts their compliance with income tax. Additionally, this study developed a tax compliance scale (the RTRP scale) that effectively suits the nature and characteristics of SMEs, enabling the quantitative measurement of their compliance levels with income tax, as well as comparisons between SMEs.

Voters’ influence on local tax policy

In a well-functioning democracy, citizens can influence public policy through voting. By voting prospectively, voters may aim to select politicians that make policies in line with their preferences, and, by voting retrospectively, they may reward or punish politicians for their performance. To what extent voters actually influence policy is unclear, especially in local government, where many impediments to policy responsiveness may exist. Moreover, voters may realize that their influence on public policy is negligible and vote expressively instead of instrumentally. We investigate a key area in public policy, tax policy, using panel data on municipalities in the Netherlands in the period 1998–2021. We find that changes in the political color of the municipal council on average do not lead to changes in tax levels or tax distribution. However, incumbents that lower taxes fare better at the polls than incumbents that moderately increase taxes. Interestingly, strong tax increases do not lead to more severe electoral punishment, and punishment does not seem to differ between left-wing and right-wing incumbents. Our results suggest that expressive voting plays an important role. People may vote left-wing and express their identity as charitable persons, and then punish incumbents who actually raise taxes.

Taxes and Entrepreneurship in Former Communist Countries

Abstract This paper analyzes the influence of the fiscal framework on entrepreneurship, seeking to quantify the magnitude of this influence. It starts by reviewing the main findings of the literature, showing that, while there is consensus that both tax levels and the bureaucracy that surrounds tax payments have a negative effect on entrepreneurship, there is no unanimity regarding which of the two have a stronger effect. It then continues with an empirical approach, which resides in estimating an OLS regression of two measures of entrepreneurship activity (the number of enterprises that are newly created during one year, and the total number of enterprises that exist in one year in a country) on three fiscal explanatory variables (profit tax levels, labor tax levels, and the time spent to pay taxes), using a panel sample of 27 post-communist countries across a period of 15 years. Empirical results suggest that both tax levels and the bureaucracy that surrounds tax compliance have a negative effect on entrepreneurial activity. The level of the profit tax exerts the strongest negative influence on both the number of newly created enterprises, and the total number of enterprises that exist in a country, while the level of the labor tax exerts a negative, albeit weaker influence, which is significant only for the total number of enterprises. The time spent to pay taxes (expressed as the number of hours per year) returns the lowest coefficient, yet it has a statistically significant negative effect on both the number of newly created and the total number of enterprises.

Macroeconomic impact of tobacco taxation in Indonesia

BackgroundA significant tobacco tax increase has long been advocated to reduce Indonesia’s high smoking prevalence. However, implementing such a policy remains challenging due to the tobacco industry’s argument that it...

Factors Determining the Average Price Level: A Combined Microeconomic and Macroeconomic Approach

We analyze various determinants of the average price level using a strictly mathematical approach. Starting with the microeconomic perspective, we review the effect of demand shifters such as consumer income and the level of advertising on the average price level in a simple partial market equilibrium model. Then, we discuss the effect of supply shifters such as the exogenous tax level, worker wage, rental rate, and technology. We use implicit differentiation and Jacobian determinants. While government spending triggers inflation, taxes have the opposite effect. This is consistent with Keynesian theory. Money supply increases national income and prices while reducing the equilibrium interest rate. Therefore, money supply has pro-inflationary effects. The effect of money demand is the opposite—it increases the equilibrium interest rate, thereby lowering national income and prices. Augmenting the model to the level of international trade, we find that exports raise national income, the interest rate, and the average price level, while the effect of imports is just the opposite. Government spending raises the exchange rate while continuous inflation lowers it.

Economic-environmental assessment of emission tax policy in developing countries: evidence from Iran

PurposeThe present study aims at quantifying the likely impacts of an environmental tax on macroeconomic variables and pollution in Iran.Design/methodology/approachThe computable general equilibrium model, which allows the prediction of the economy-wide effects of any change in policy instruments, is applied.FindingsThe main findings reveal that gross domestic product, private consumption and income in both urban and rural areas will follow a declining trend as a result of environmental tax imposition. In a scenario with the highest level of tax, the predicted percentage change to the gross domestic product and private consumption is estimated at −21.32 and −40.96, respectively. In the same scenario, pollution emissions would decrease by 12.4–22.6% for CO2, CH4 and N2O.Originality/valueThis study uses a general equilibrium model to examine the effects of the carbon tax on environmental issues and household welfare, considering the unique conditions and regulations of Iran. While the related literature examines the CO2 tax, the current study covers more pollutants, including CO2, CH4, N2O, CO, SO2 and NOx. In addition, a distinguishing feature of the current study is that it applies a modified version of the social accounting matrix (SAM) database, which includes the heavy subsidies of energy products. Another significant feature of the current study is that it examines tax policy while tax rates are exerted endogenously (compared to previous studies).

Do Energy Consumption and CO2 Emissions Significantly Influence Green Tax Levels in European Countries?

In this article, we analyze the correlation between GDP/capita variation, primary and renewable energy consumption and greenhouse gas emissions on the one hand, and green taxes on the other. Green taxes are the main instruments used to limit activities that have a negative impact on the environment. These consist of taxes paid by producers and/or consumers for any activity that generates pollution. The results of dynamic regressions, validated by the applied robustness tests, indicate a significant and positive correlation between primary energy consumption and total environmental taxes, respectively energy taxes. At the same time, this shows that variation in GDP/capita significantly and positively influences transport taxes and pollution taxes. In contrast, net greenhouse gas emissions and the supply, transformation and consumption of renewable sources and waste do not significantly influence the total green taxes and their components. This finding is useful to both academic research and government policies for the realistic substantiation of the levels of green tax revenues and for establishing appropriate measures meant to reduce CO2 emissions.

Assessing credit risk sensitivity to climate and energy shocks: Towards a common minimum standards in line with the ECB climate agenda

A disordered energy transition might impact borrowers’ ability to repay and service debt; this calls for methods for integrating climate into credit risk modelling. This integration is required not only for risk management, but also for adjusting credit ratings for collateral pledged in Eurosystem monetary policy operations. This study introduces an innovative methodology to evaluate Italian non-financial firms' exposure to climate policy risks, gauging the impact of climate policies on firm-level default probability (PD). By simulating a shock to energy expenditure originating from different levels of a carbon tax, we analyze the potential impact on firms’ PD. Our method offers a comprehensive understanding of the channels through which energy shocks propagate and their implications on firms’ vulnerability. Our findings show that the impact of carbon taxation on credit risk would be contained, raising the average PD by a range of 0.6–4.1 basis points according to the different levels of carbon tax. The effect is slightly larger for the Agriculture and Services sector, while there is no clear pattern relating to firm size.