Local Tax Reform Research Articles

Visual Analysis of the Local Finance Research Trend and Development Trend in China

Based on the relevant data retrieved by CNKI from 1992 to 2020, the key word LLR clustering and Brust detection were conducted by CiteSpace literature metrology software, and the knowledge map was drawn. The research finds that the hot topics of local finance research focus on four clusters: local finance risk, tax reform, fiscal expenditure and local finance analysis model;"Soft budget constraint" and "local government debt" will be the focus of local finance research in the future.

Local Property Tax Reform and Municipality Spending Efficiency

Local Property Tax Reform and Municipality Spending Efficiency

Local Tax Reforms and Intergovernmental Fiscal Transfers Policy: The Relevance of Governance Forum

This study invokes fiscal federalism literature by examining tax reforms-intergovernmental fiscal transfers policy relationships in local government. Additionally, it investigates whether the governance forum mediates that association. Employing structural equation modeling, data from eight districts, two municipalities, and 80 sub-counties in Uganda’s North-Western region were tested. For quite a long time, Uganda; an East African country, has been acclaimed for its federalism proficiency. Findings indicate that: much as tax autonomy, coordination capacity, tax inconsistency, and corruption; notable tax reforms attributes, predict transfers policy changes, governance forum plays no mediation role in the tax reforms-transfers policy set-up. Implications for theory-research-practice triangulation are discussed and future research direction has also been proposed.

일자리 창출을 위한 지방세제 개편방안

일자리 창출을 위한 지방세제 개편방안

Heterogeneity in Tax Rate Elasticities of Capital: Evidence from Local Business Tax Reforms

This study examines heterogeneity in tax rate elasticities of corporate capital using staggered variation in local business tax rates of German municipalities. The results suggest an average long-run capital decline of 0.97% after a 1% increase in the tax rate. In line with prior literature that suggests higher investment-cash flow sensitivities of firms with financing constraints tax rate elasticities are up to half times larger for financially constrained firms than for unconstrained firms. Moreover, capital responses are about half times larger for firms with fewer tax avoidance possibilities. Finally, this study contributes to the literature on tax incidence. I find a weaker relation between taxes and capital for firms that are less likely to bear the economic burden of the tax because they shift the tax incidence to their stakeholders.

REDUCING THE CYCLICAL VARIABILITY OF LOCAL TAXES IN JAPAN USING A THREE-FACTOR TAX BASE

ABSTRACT Local business tax reform in Japan from 2004 through 2015 provides opportunity to evaluate the effects on cyclical variability of local taxes through movement from a single factor income-based tax to a three-factor base consisting of profits, capital and value added. The tax rates applied individually to each of the three factors have been reweighted periodically beginning in 2004 and most recently in 2015. Empirical tests using data from the Japanese Ministry of Finance indicate that as a result of the reweighting of the three-factors the short-run elasticity of local business tax revenues may be approaching that of a pure value added tax base. Models of hypothetical tax revenues under the periodically reweighted three-factor tax bases show the burden of the local business tax being shifted away from capital toward labor, raising the concern that possible adverse factor substitution may result. Keywords Variability of tax revenues, elasticity of tax revenues, value added tax, local tax receipts, enterprise tax

The political economy of property tax in Africa: Explaining reform outcomes in Sierra Leone

Effective local government taxation is critical to achieving the governance benefits widely attributed to decentralization, but in practice successful tax reform has been rare because of entrenched political resistance. This article offers new insights into the political dynamics of property tax reform through a case study of Sierra Leone, focusing on variation in experiences and outcomes across the country’s four largest city councils. Based on this evidence, the article argues that elite resistance has posed a particularly acute barrier to local government tax reform, but that ethnic diversity has sometimes served to strengthen reform by fragmenting elite resistance. Furthermore, opposition councils have had stronger incentives to strengthen tax collection than councils dominated by the ruling party, in order to increase their fiscal autonomy. More generally, heightened electoral competition can lead to sustained revenue gains by encouraging city councils to adopt a more contractual approach to tax reform that stresses transparency, engagement, and equity. PROPERTY TAX HAS THE POTENTIAL to be both a primary source of local government revenue in low-income countries and a critical component of efforts to achieve the broader governance-enhancing objectives of decentralization. By providing local governments with expanded revenue, the property tax *Samuel S. Jibao (sjibao@yahoo.com) is Director of the Centre for Economic Research and Capacity Building, Freetown, Sierra Leone, and a Senior Lecturer at the African Tax Institute, Department of Economics, University of Pretoria, South Africa. Wilson Prichard (wilson. prichard@utoronto.ca) is an Assistant Professor in the Department of Political Science and Munk School of Global Affairs at the University of Toronto, and the Research Director of the International Centre for Tax and Development. 1. Pranab Bardhan, ‘Decentralization of governance and development’, The Journal of Economic Perspectives 16, 4 (2002), pp. 185–205; Arun Agrawal and Jesse Ribot, ‘Accountability in decentralization: a framework with South Asian and West African cases’, The Journal of Developing Areas 33, 4 (1999), pp. 473–502; Jean-Paul Faguet, ‘Does decentralization increase government responsiveness to local needs? Evidence from Bolivia’, Journal of Public Economics 88, 3–4 (2004), pp. 867–93. African Affairs, 114/456, 404–431 doi: 10.1093/afraf/adv022 © The Author 2015. Published by Oxford University Press on behalf of Royal African Society. This is an Open Access article distributed under the terms of the Creative Commons Attribution Non-Commercial License (http:// creativecommons.org/licenses/by-nc/4.0/), which permits non-commercial re-use, distribution, and reproduction in any medium, provided the original work is properly cited. For commercial re-use, please contact journals.

GOALS AND REFORMS OF CURRENT JAPANESE LOCAL TAX SYSTEM

This paper examines the structure of Japanese local revenue and the characteristics of the Japanese local tax system. Further, it examines the goal of financial autonomy in the Japanese context. Local revenue is mainly composed of the general revenue resources in terms of quantity and quality. These revenue sources accounted for 55.2% of the total local revenue in fiscal year 2012. Moreover, they are not earmarked for specific purposes and are essential for local autonomy. The key elements of the general revenue resources are the local taxes, the local transfer tax, the special local grants, and the local allocation tax. Local tax is the principal local revenue and the core method for the financial autonomy. However, the local tax system currently faces various issues. I identify several issues with the local tax systemdisparity, sensitivity, overlap between national taxes and local taxesand discuss the need to enrich local autonomy. These are architectural issues that are closely related to the characteristics of the Japanese local tax system. Further, I examine the Japanese local tax reforms. The Japanese tax reform strategy involves two approachesan urgent approach and a long-term approach. It would be preferable for the citizens to distinguish between these approaches when considering the local tax reforms. Finally, I suggest three goals for the Japanese local tax system. The first is to reduce disparity. In a manner, this is the hottest issue at present. The national government enacted several very important reforms such as the foundation of the local corporate special tax in 2008. The second goal is to enrich autonomy. In order to achieve this, the Trinity Reform was implemented in Japan from 2004 to 2006. Moreover, the local governments will receive addition al tax reven ue inthe form of anin crease incon sumptiontax in2014. However, the issue of the gap between revenue and expenditure has become rather remarkable. The third goal is to stabilize the tax revenue, which is a significant agenda. In this context, the local governments have made much of the asset tax and the consumption tax. Moreover, the expan sionof local con sumptiontax in2014 could con tribute to stability. However, the taxes on corporate income (which amount to 3 trillion yen) are still principal local taxes and they are very elastic to economic situation. How to deal with those elastic local taxes and to procure more stability for the local tax system seems to be more crucial. And as the concept of social values is becoming complicated, the reform of local tax system will be complex. But whenwe con sider the future financial autonomy, the following point is significant. The local governments are required to be more and more sensitive to community needs in the framework of financial autonomy. And relationship between sensitivity

Urban Authorities and Economic Sectors

Taxation on businesses, which makes up two thirds of local authorities' revenues, urges them to widen the range of their economic interventions. The communauté d'agglomération Plaine Commune is one of the most dynamic in the Parisian metropolis and has had considerable expertise at their disposal for 10 years. In order to ensure their economic influence, they now endeavour to stimulate and even structure some economic industries. Unfortunately, a local tax reform in progress may well jeopardise the pattern of development which is presented in this article.

The French Local Business Tax Reform: Myth and Reality

With effect from 1 January 2010, the French government has reputedly “abolished” the controversial tax on notional income of a business, i.e. the local business tax. With EUR 34 billion in annual proceeds, this tax represented around 43.9% of local government resources, and resulted in more revenue than corporate income tax. A thorough understanding of the reform is, thus, essential for any potential investor.

A Local Income and Corporation Tax as an Alternative to the German Local Business Tax

Summary The paper empirically analyses the impact on individual municipalities of replacing the German local business tax by a local surcharge on income and corporation tax. The microsimulation models used for this and refined for the present paper originate in calculations carried out for the Federal Ministry of Finance in cooperation between the Federal Statistical Office and the Humboldt University in Berlin. The data basis is formed by the roughly 30 million individual data sets of the most up-to-date income and local business tax statistics provided by the Federal Statistical Office. A local surcharge tax which, like the BDI/VCI model analysed, assigns tax revenue incurred on profits to the municipality of permanent establishment and that on other income to the domicile municipality, affects the revenue situation of the municipalities in highly differing ways. The losers in such a local tax reform include those municipalities in which an above-average number of industrial and commercial enterprises are resident. These are the “core towns” of the Old Federal Laender in particular. By contrast, the revenue situation of the surrounding municipalities and of the municipalities with a rural character would considerably improve on average. However, the core towns in the New Federal Laender which are currently tax-weak because they have little industry would also improve their revenue situation in most cases by applying a surcharge tax. In order to maintain the financial status quo, the core towns in the Old Federal Laender in particular would have to levy relatively high local tax rates, whilst the surrounding municipalities would be able to become more attractive by applying tax rates which as a rule would be much lower. The consequence of this would be that highincome earners in the core towns would have a not inconsiderable incentive to change their place of residence for tax purposes, which would further worsen the financial situation of the core towns.

An Efficiency Analysis of Proposed State and Local Sales Tax Reforms

1. IntroductionState and local tax policymakers face a large number of particularly severe public finance conundrums.1 One pressing long-run issue is the slow but steady erosion of state and local general sales and use tax bases.2 With a few well-known exceptions, sales taxes are levied primarily on tangible goods.3 Most services are untaxed, and services have grown as a share of consumption spending.4 Thus, sales tax bases have declined as shares of total spending.5 At the same time, legislators have increased tax rates.6 Since consumers tend to substitute away from products whose relative prices have risen, higher tax rates tend to exacerbate the problem they are intended to address.A number of reforms designed to reduce base erosion have been proposed. These include broadening tax bases, transforming sales taxes to a consumption base, and wholesale replacement of sales taxes with income taxes. Each proposal has some potential to shore up sales tax bases; thus, from an economic perspective, the policy choice should turn on efficiency, equity, and simplicity effects. Very little quantitative information on the efficiency effects of such proposals is available. This paper uses computer simulations to examine the efficiency effects of reforms designed to reduce sales tax base erosion.7Trends underlying tax base erosion appear to be structural and likely to continue. Baumol (1967) argues there is a structural tendency for manufacturing productivity growth to exceed productivity growth in services, so relative prices of manufactured goods tend to decline.8 If demands for both goods and for services are inelastic, the services sector will tend to absorb ever-larger fractions of resources and increase in proportion to total value added. Recent evidence indicates that both taxed commodities (mostly tangible goods) and untaxed commodities (mostly services) are price inelastic (Russo and Wei 2004). Everything else held constant, therefore, the relative price decline in manufactured goods tends to reduce their share in total spending, supporting a continued shift toward services.9 Since older consumers spend relatively large fractions of income on untaxed medical services, aging of the population also could contribute to sales tax base erosion. As a result of the Interstate Commerce Clause, remote vendors often do not collect states' general sales taxes. If Internet sales continue to grow rapidly relative to total purchases, e-commerce could exacerbate the problem.10 This possibility gains support from Goolsbee's empirical work. His results indicate relatively large tax elasticities for Internet sales (Goolsbee 2000a). To make matters worse, tax sensitivity appears to increase over time (Goolsbee 2000b).Structural sales tax reform appears unavoidable. One possibility is to broaden the sales tax to more services. A variation on this theme would transform the sales tax to a true consumption tax. A third approach is to replace sales tax revenue with income taxes (Varian 2000).11 The first and second approaches attempt to shore up the sales tax base so that it adjusts automatically to shifts in the composition of spending and in the location of purchases. The third approach reduces erosion by switching the tax base to one that appears less vulnerable to shifting consumption patterns. Each approach has features that could improve efficiency and features that could reduce it. Efficiency improvements could result from base broadening, which would result in lower tax rates (revenue held constant), and reducing existing distortions due to disparate tax treatment of goods versus services and brick-and-mortar versus remote sales.However, taxing more services could reduce efficiency because firms spend substantial amounts on services (Fox and Murray 1988; Due and Mikesell 1994). …

An Efficiency Analysis of Proposed State and Local Sales Tax Reforms

With few exceptions, state and local general sales and use taxes are levied primarily on tangible goods. Secular trends in production and consumption of goods and services, as well as legislated exemptions and exclusions, have eroded sales tax bases. A number of reforms designed to reduce base erosion have been proposed, including base broadening, conversion to a consumption tax, and wholesale replacement of sales taxes with income taxes. Each proposal has potential to shore up sales tax bases. From an economic perspective, the policy choice should turn on efficiency, equity, and simplicity. This paper reports on a computer analysis of efficiency effects. The results suggest that (i) base broadening can increase economic efficiency, (ii) converting to a consumption tax base dominates base broadening, (iii) replacing sales taxes with higher income taxes could produce large efficiency losses, (iv) base broadening could generate efficiency gains even if untaxed remote sales become a “sizable” fraction of total sales, and (v) even partial base broadening could produce sizable efficiency improvements.

Isaac Sherman and the trials of gilded age liberalism

Isaac Sherman (1817-81) was a self-made New York merchant and financier. Originally a Barnburner Jacksonian Democrat, he became a Free Soiler and in 1856 a campaign manager for Republican John C. Fremont. An influential Unionist, Sherman subsequently became a self-taught expert on railroad finance, currency, and local and state taxation. This article draws upon the Sherman papers recently acquired by the Huntington Library to offer an interpretive biography of this hitherto obscure but important railroad financier and laissez-faire ideologue. Sherman's activities show the personal and intellectual connections between the Equal Rights and Free Labor ideologies of the pre-war years and the Laissez-Faire Constitutionalism of the post-war period. They also reveal the anxieties of the haute bourgeoisie of the Gilded Age, and the legal stratagems used by Sherman and others to return the United States to the gold standard and overturn the Federal income tax. Finally, Sherman's proposals for local and state tax reform, conterminous with and similar to those of Henry George, reveal the limits of classical liberalism in both its laissez-faire and utopian forms.

Fiscal Illusion and Political Accountability: Theory and Evidence from Two Local Tax Regimes in Britain

Local tax reform in Britain in 1993 (reinstating a propertytax) may have reversed some intended fiscal illusion reducing,and ``accountability'' improving, features of the poll tax(itself a reform introduced in 1990 with the specific aim ofpromoting accountability). We formalize these features withina median voter model of the demand for local publicexpenditure that distinguishes between accountability andfiscal illusion effects. The model shows that a prioriaccountability effects on expenditures are ambiguous.Available data for England and Wales are used to test themodel. We find strong evidence of grant illusion (the flypapereffect), similar across tax regimes, with evidence of renterillusion and of less accountability under the property tax.The degree of local income inequality appears to affectexpenditure levels only with the property tax.

Pennsylvania's Success with Local Property Tax Reform

Abstract Fifteen cities in Pennsylvania are pioneering an innovative approach to local tax reform that harnesses market incentives for urban renewal.Opting for the so‐called “two‐rate” or “split‐rate”property tax, these cities are lowering taxes on buildings, thereby encouraging improvements and renovations, while raising the tax on land values, thus discouraging land speculation. The resulting infill development as indicated by increased building permits means downtown jobs, efficient use of urban infrastructure, an improved housing stock, and less urban sprawl.Cities in other states are poised to follow Pennsylvania's example.

The Reformed System of Local Government Finance in Scotland

This article examines the principles behind recent reforms in local government finance in Scottish local government. It is argued that whilst the local tax reform has been implemented relatively smoothly, the other reforms which accompanied it have been more problematic. In particular the switch from selective to universal capping has resulted in the unintended consequence of previous ‘underspenders’ spending much closer to their centrally determined level. Accountability has also become increasingly blurred due to increased local dependence on grant. The large mismatches between Government Assessed Expenditure levels and notional budgets have clouded the picture still further.

産業空洞化と地方税制

産業空洞化と地方税制

Local governments' monopoly power and local tax reform: Theory and evidence from the U.K.

This paper hypothesises the existence of several sources of monopoly power for local governments when the system of local taxation is reformed, by central government. In particular we argue that information asymmetries between tax-payers and (central and local) government at the time of reform provide opportunities for local politicians to set tax levels which differ from those expected in a full information setting. We predict that, compared to pre-reform tax levels, local tax levels post-reform will differ according to four local government characteristics: (i) the size of the seat majority of the ruling local party; (ii) whether the party controlling local government is the same as, or is different from, the ruling party of central government; (iii) whether the local government structure has one or two ‘tiers’ and whether the same party controls both ‘tiers’; and (iv) the degree of indebtedness of the local authority. Testing the model on the U.K. local tax reform of 1990, we find strong evidence consistent with the hypothesis that inter-authority differences in local tax levels reflect differences in the degree of local political monopoly power resulting from information asymmetries. This monopoly power appears to have been used generally, but not exclusively, to raise tax levels.

General Equilibrium Effects of Local Taxes

This paper analyzes the consequences of the property tax and a local sales tax in the context of a spatial, general equilibrium model of a closed city with a generalized utility function of the residents and production function of housing. The range of effects are different from those obtained earlier by other authors who have generally assumed particular functional forms. For example, it appears that under certain conditions, the property tax can even lead to an increase in metropolitan size. Alternatively, a local sales tax can lead either to an expansion or contraction in city size. Results obtained are used to analyze the consequences of different types of local tax reforms.