Tax Rates Research Articles

Understanding Tax Compliance: The Interplay between Tax Morale, Tax Rates, and Mediating Intentions

Small, and Medium Enterprises(SMEs) play a crucial role in the national economy. The stability of the economy can be maintained through the tax compliance, which contributes significantly to economic stability. This study aims to examine the impact of tax morale and tax rates on tax compliance. Additionally, it investigates the role of taxpayer intention as a mediator between tax morale and tax rates on tax compliance. The research involved 100 SMEs respondents in the DKI Jakarta area and employed quantitative analysis using Smart-PLS as the analytical tool. The results show that tax morale significantly influences both tax intention and tax compliance. However, tax rates do not have a significant impact on tax intention or tax compliance. The role of intention as a mediating variable partially mediates the effect of tax morale on tax compliance, while intention does not mediate the effect of tax rates on tax compliance. This study contributes additional literature on tax compliance and provides practical insights for tax authorities, emphasizing the need to enhance tax morale through effective tax education to motivate taxpayers to fulfill their tax obligations.

Can changes in corporate income tax rate affect corporate innovation?

The relationship between corporate income tax rates and innovation is a critical international issue. Existing studies often overlook the potential mechanisms of market competition and productivity heterogeneity. This paper addresses these gaps by integrating these elements into a unified mathematical analysis framework. Using China's corporate income tax reform as a quasi-natural experiment, this study empirically tests the model. The findings reveal that decreases in tax rates significantly foster innovation, while increases have the opposite effect. The underlying mechanism involves market competition, with the impact of tax changes being more pronounced in firms with higher productivity. This study deepens the understanding of the nexus between corporate income tax and innovation, providing new insights to refine tax policies that promote innovative economic development globally.

Carcass Characteristics and Blood Biochemical Parameters of Cobb-500 and Hubbard Chicken Strains Fed on Commercial and Farm-Formulated Diets

The limits of commercial diets, their quality, and their rising costs are some of the major challenges to broiler production in Ethiopia. The purpose of this investigation was to evaluate carcass yield characteristics and blood biochemical parameters of Cobb-500 and Hubbard chicken strains fed on farm-formulated diets (T1) and three different commercial diets (T2, T3, and T4). A total of 384 mixed-sex day-old chicks (192 per strain) were randomly assigned to four dietary treatments with four replicates, each consisting of 12 broilers. The experiment was set up as a 2 × 4 factorial design, providing each strain with four diets in a completely randomized design. After 42 days of the experiment, one male and one female of each strain from each pen (eight birds per treatment) were slaughtered for carcass yield and hematological analysis. Although diets had a significant impact on live body weight, feed conversion ratio, and feed consumption among the study treatments, they had no significant effect on the mortality rate of the broilers as a whole. There was a significant effect of strains on the weight of eviscerate, dress, thigh, drumstick, breast, neck, back, and eviscerate yield percentage, with Cobb 500 showing higher values than Hubbard broilers. The farm-formulated diet (T1) significantly increased the weight of non-edible offal compared to the commercial diets, except for the weight of crops and lungs, which were similar to those in commercial diet group T4. The Hubbard strain showed a higher least square mean for packed cell volume than the Cobb-500 strain. Sex was found to have no significant impact on the hematological parameters. The farm-formulated diet (T1) also resulted in a higher marginal return rate than that of the commercial diet (T3) in the Cobb-500 strain. These findings suggest that locally sourced farm-formulated diets could be a viable alternative to commercial diets for broiler chickens in the study area. Keywords: Broiler chicken, biochemical parameter, Carcass trait, Farm-made diet, Haematology, Profitable

Analyzing Entertainment Tax Impact on Batu City's Regional Revenue and Taxpayer Compliance Levels

Entertainment tax is one of the sources of revenue for local governments. This study aims to examine the contribution of entertainment tax to Regional Original Revenue (PAD) in Batu City. The research method used is qualitative descriptive using object data at the Batu City Regional Finance Agency. Based on data from the Central Statistics Agency (BPS), Batu City's tax financial statements from 2020 to 2022 are tax revenues for the entertainment sector. In 2020, the contribution reached 12.42%, while in 2021, the contribution decreased to 8.89% and in 2022, the contribution decreased to 12.78%. Although the data has decreased and increased, it shows that the entertainment tax in Batu City has a lack of contribution to the Regional Original Revenue (PAD). The government needs to monitor the potential of taxes and conduct socialization so that this contribution can increase. In order to increase the effectiveness of entertainment tax revenue, the Batu City Regional Revenue Office needs to provide socialization to the public regarding entertainment tax rates and calculation methods.

Do political connections pay? Evidence of corporate payroll tax planning in Chinese firms

ABSTRACT Drawing on a dataset of listed Chinese firms, our study reveals a notable reduction in effective payroll tax rates for politically connected firms. Using China’s anti-corruption campaign as an exogenous shock, our difference-in-differences (DID) analysis indicates a significant increase in the effective payroll tax rates of politically connected firms after the campaign. Well-developed legal institutions, social security fund holdings, and high-quality external audits mitigate the effect of political connections on a firm’s effective payroll tax rates. These results are instrumental in regulating firms’ payroll tax payments from an informal institutional perspective.

Further Thoughts on the Capital Gains Tax

The paper illustrates why Canada’s Budget 2024 tax rules do not treat the earners of capital gains uniformly or fairly, because of inflation. The effective tax rates on real capital gains vary substantially among taxpayers depending upon the holding period and the rate of return. Furthermore, capital gain taxes may even create real losses. Uniform inclusion rates applied to nominal capital gains poorly measure real capital gains and typically result in considerable underassessment or overassessment of actual capital gains income (i.e., improvement in purchasing power). An appropriate measure of capital gains should use a cost base adjusted for inflation.

Optimal fiscal policy in small open economies with habit persistence

Abstract This paper sets up a small open economy model with habit persistence in consumption in which distortionary taxation is available in a flexible price environment. In open economy, the habit persistence in consumption aggravates the terms of trade externality, absent in closed economy, calling for more aggressive fiscal policy. While optimal labor income taxes are time-invariant in a closed economy with internal habit, they should be time-varying in an open economy to alleviate the terms of trade externality, even if the intertemporal elasticity of substitution equals the intratemporal elasticity of substitution. In a small open economy composed of households with habit persistence in consumption, households’ decision to gradually adjust their consumption and labor hours intensifies the undesirable terms of trade externality or the terms of trade channel. This generates a time-varying wedge between the efficiency conditions of the Ramsey planner and the market equilibrium conditions, calling for a time-varying taxation which takes into account the intertemporal elasticity of substitution and the intratemporal elasticity of substitution between home and foreign goods, in addition to the degree of habit and goods market distortion. The volatility of optimal tax rate increases with the degree of habit, whether households have external or internal habit. The volatility of tax rate shows an inverted U-shape in the degree of openness in the small open economy with habit. Finally, the optimal labor income tax rate moves countercyclically for low degree of intratemporal elasticity of substitution, while it moves procyclically for high degree of intratemporal elasticity of substitution.

Government size and the effectiveness of fiscal policy: the bigger the better?

Abstract This study investigates the effect of government size, as measured by the tax revenue to gross domestic product (tax-GDP) ratio, on output responses to increases in government purchases. First, we show that in a standard static neoclassical model, the stimulus effect of fiscal expansion on output increases with the tax-GDP ratio. This finding is quantitatively confirmed using a dynamic neoclassical model with standard functional forms and parameter values. To empirically test the theoretical findings, we analyze the responses of macroeconomic variables to an unanticipated increase in government purchases for 12 Organisation for Economic Cooperation and Development (OECD) countries during 1985–2019 using a state-dependent local projection method. The estimation results reveal that while output responses to an unanticipated fiscal expansion are significantly positive when the tax-GDP ratio is high, they are statistically indistinguishable from zero when the ratio is low. Overall, our findings suggest that fiscal expansion can stimulate output more effectively at high tax rates, unlike the well-known predictions of the traditional Keynesian model.

Comparative study of caná – a fermented sugarcane beverage produced from culms with and without bark

Cachaça is a Brazilian beverage produced by distilling fermented must from sugarcane juice, with an alcohol content ranging from 38% and 48% v/v. Currently, thousands of “Alembics” (small-scale destilleries located in agricultural environments) produce cachaça at a high standard of quality with both national and international recognition. These producers possess the infrastructure, knowledge, and expertise required to introduce Caná (a fermented sugarcane beverage) into their production line. According to Brazilian legislation, the alcohol concentration for this beverage is defined to be within the range of 4% to 14%. Being only fermented, Caná retains the phenolic compounds from the juice, which have a high nutritional value. Furthermore, following the example of the European Community, there are prospects for Brazil to implement lower tax rates for beverages produced in small-scale factories with a low alcohol content. This context means that Caná is a significant option for enhancing the competitiveness of Alembics in both the Brazilian and international markets. In this work, a comparison was made between Caná produced from juice obtained from intact stalks and the core (after removing the woody wall). The sensory results were markedly different, and there is still a need for some operational adjustments. Both beverages were positively evaluated, which confirms the prospect of a wide range of colors and flavors for Caná resulting from the use of different varieties of sugarcane, and there exists the possibility of numerous adjustments in operational procedures.

When digital taxes come due: national digital taxes and the negotiation of the OECD inclusive framework

ABSTRACT What explains major shifts in international tax cooperation? Existing literature emphasises either the centrality of the United States for successful reform or the power of multinational corporations to exert downward pressure on global tax rates. Nonetheless, in 2021 members of the OECD Inclusive Framework (IF) agreed to tax some of the largest multinational companies based on their market activities rather than physical presence – a fundamental change to the international taxation regime that the U.S. government and U.S. multinational corporations (MNCs) had long opposed. We argue that the spread of digital value chains has exposed the activities of MNCs to greater regulatory activity, allowing governments to use unilateral regulatory action as leverage in international negotiations. By shifting the reversion point – the status quo absent an international agreement – governments were collectively able to transform an agreement. We demonstrate our argument by examining how the implementation of national digital services taxes (DSTs) affected the OECD IF negotiations. Drawing on interviews with key stakeholders and primary sources, we show that the adoption of DSTs, including in France and India, and the threat of additional proliferation of DSTs, pushed the United States to drop its longstanding opposition to parts of the IF process.

Differential Bunching Impacts Across the Income Distribution: Evidence from Tax Administrative Data

AbstractWe investigate the behavioural responses of individual taxpayers to changes in marginal personal income tax rates applying empirical bunching methodology to tax administrative data from Zambia over the period from 2014 to 2021. We find evidence for excess bunching at the first kink in the tax schedule for all years but less evidence of bunching at the second and third thresholds. While bunching is considerable and behavioural responses are observed to changes in the location of the kinks over time, bunching at reference points (’round-number bunching’) also appears large. Implied elasticities of taxable income are however not remarkable, and comparing actual and estimated counterfactual wage distributions reveal that missed tax revenue arising from the excess bunching is limited. This is consistent with the observed bunching reacting sharply and immediately to changes in the location of the kink points over time, suggesting that observed behavioural change is driven by reporting behaviour rather than real economic responses.

Enriching wind power utility through offshore wind-hydrogen-chemicals nexus: Feasible routes and their economic performance

The offshore wind-hydrogen strategy is crucial for achieving carbon neutrality, yet faces challenges like wind power variability, surplus hydrogen, and elevated costs. Recently, linking offshore wind, hydrogen, and chemicals is proposed to address these challenges. However, there is a lack of a comprehensive techno-economic analysis of this nexus. This study, as one of the first attempts, performs the techno-economic analysis of 8 feasible offshore wind-hydrogen-chemical nexus routes, in which factors of technology, economics, and financial policy are considered. The research indicates that Route 7, which incorporates offshore wind power utilizing proton exchange membrane technology for hydrogen production and blends it with natural gas on offshore platforms, demonstrates the most cost-effective outcome. The key factors influencing the cost reduction of these routes encompass the green hydrogen price, capital costs, internal rate of return, electricity price, value-added tax rate, and loan ratio. Among these, the green hydrogen price is the primary determinant influencing the cost of green products. If the price of green hydrogen decreases to 2.19 USD/kg, green synthetic ammonia can meet the current standard of 605.47 USD/t. Finally, the results can provide important reference to support stakeholders for seeking cost-effective routes of offshore wind-hydrogen-chemical nexus in China and other regions.

Musculoskeletal patients’ preferences for care from physiotherapists or support workers: a discrete choice experiment

BackgroundDelegation of clinical tasks from physiotherapists to physiotherapy support workers is common yet varies considerably in musculoskeletal outpatient physiotherapy services, leading to variation in patient care. This study aimed to explore patients’ preferences and estimate specific trade-offs patients are willing to make in treatment choices when treated in musculoskeletal outpatient physiotherapy services.MethodsA discrete choice experiment was conducted using an efficient design with 16 choice scenarios, divided into two blocks. Adult patients with musculoskeletal conditions recruited from a physiotherapy service completed a cross-sectional, online questionnaire. Choice data analyses were conducted using a multinomial logit model. The marginal rate of substitution for waiting time to first follow-up physiotherapy appointment and distance from the physiotherapy clinic was calculated and a probability model was built to estimate the probability of choosing between two distinct physiotherapy service options under different scenarios.Results382 patient questionnaires were completed; 302 participants were treated by physiotherapists and 80 by physiotherapists and support workers. There was a significant preference to be seen by a physiotherapist, have more follow-up treatments, to wait less time for the first follow-up appointment, to be seen one-to-one, to see the same clinician, to travel a shorter distance to get to the clinic and to go to clinics with ample parking. Participants treated by support workers did not have a significant preference to be seen by a physiotherapist and it was more likely that they would choose to be seen by a support worker for clinic scenarios where the characteristics of the physiotherapy service were as good or better.ConclusionsFindings highlight that patients treated by support workers are likely to choose to be treated by support workers again if the other service characteristics are as good or better compared to a service where treatment is provided only by physiotherapists. Findings have implications for the design of physiotherapy services to enhance patient experience when patients are treated by support workers. The findings will contribute to the development of “best practice” recommendations to guide physiotherapists in delegating clinical work to physiotherapy support workers for patients with musculoskeletal conditions.

The incidence of tax rates on workers’ debt stability and demand regimes

This paper explores different tax regimes in a Post Keynesian model where workers get into debt to emulate the consumption of upper-income classes. The government taxes income to fund a social wage that would reduce workers’ need to get into debt. Three tax regimes are analyzed: taxing profits, managers’ wages, or both. In a numerical exercise, we explore the effects of changing the within-wage and functional inequalities. The government’s income tax choices and the wage bill’s distribution matter for the economy’s sustainability and the relationship between distribution and growth. The demand regime of the economy is not independent of policy. Taxing only profits and reducing wage inequality are the best possible outcomes in the model if we were to wind down the unsustainability feature of neoliberalism without sacrificing real performance.

Do tax incentives for innovation attract high‐technology investment from emerging markets? Evidence from China's outward foreign direct investment

AbstractWe examine whether the innovation box regime (IBR), a tax incentive with lower tax rates on intellectual property (IP)‐related income, attracts high‐technology investment from emerging markets. Using the staggered difference‐in‐differences (DID) method, we find that China's high‐technology investment in IBR countries, relative to non‐IBR countries, increases significantly after the implementation of IBR. This finding is robust to a battery of sensitivity tests. The mechanism analysis suggests that the attraction of the IBR for high‐technology investment is realised through the encouragement of innovation, and this finding is also verified in the heterogeneity analysis. We also find that the IBR has a positive effect on high‐technology investment only if the tax incentives apply to pre‐existing IP before the regime implementation, and the ease with which enterprises can directly use the latest technologies in the host country does not have an impact on the effectiveness of the IBR. Moreover, the effect of IBR on M&A is larger than that on greenfield investment. Our study contributes to the literature and policy assessment on IBR.

Tax Capacity and Tax Effort: Evidence From Albanian Economy

The potential tax capacity is very important for assessing the tax space for policy response, especially after the COVID-19 crisis. The main objective of this paper is to study the tax capacity of the Albanian economy, relative to other transition economies with the same patterns of development. We rely on a regression-based approach for the period of 1998-2022 to estimate the potential tax capacity and tax effort. The study found that the structure of the economy, per capita income, openness to foreign trade and corruption are the most consistent explanatory variables of the potential tax capacity. The study also found that tax effort is below one for the Albanian economy, and tax-to-GDP collections are below the average level of the transition economies. We conclude that the country should continue improving the governance quality and fighting corruption to improve tax collection. The study does not support further increases in the statutory tax rates.

Optimal Taxation of Capital Income with Heterogeneous Rates of Return

Abstract We derive the Pareto-efficient mix of non-linear taxes on labour income and capital income if people differ in their rates of return on capital. We allow for two reasons why rates of return differ: because individuals with higher ability are better able to invest their capital or because wealthier individuals enjoy scale effects in wealth accumulation. In both cases, a strictly positive tax on capital income is part of any Pareto-efficient tax system. We derive a condition for the Pareto-efficient tax mix that relies solely on empirical sufficient statistics – not on social welfare weights – and find that Pareto-efficient taxes on capital income increase with the degree of return heterogeneity. Numerical simulations for empirically plausible return heterogeneity suggest that Pareto-efficient marginal tax rates on capital income are positive and substantial.

Can the policy of income taxes merger reduce air pollution emission of enterprises? Evidence from China

This study examines how a uniform income tax rate affects Chinese domestic and international firms in 2008. Specifically, it investigates how this tax policy affects these enterprises’ air pollution emissions through a difference-in-differences (DID) model. Data suggest that implementing the Policy of Income Taxes Merger can effectively decrease the pollutant emission intensity of enterprises. This program aims to provide tax benefits to Chinese domestic firms while addressing pollution emissions by alleviating financial limitations and enhancing production efficiency.

Can reducing corporate income tax rates decrease tax avoidance?

This research aims to examine and analyze the effect of reducing corporate income tax rates on tax avoidance practices carried out by non-cyclical consumer sector companies. This research involves secondary data analysis using the Panel Data Regression approach with 6 research samples taken from the non-cyclical consumer sector on the LQ45 index for the 2018-2022 period. The total sample used in the study amounted to 30 observations based on purposive sampling. The test results show that reducing the corporate income tax rate positively and significantly affects tax avoidance practices in non-cyclical consumer sector companies on the LQ45 index. This research is expected to encourage the government to formulate other tax incentive policies and provide insights into the effectiveness of the implemented tax policies. One of the expected objectives of companies utilizing tax incentives is to accelerate the economic growth of society. Lower tax burdens are hoped to encourage companies to expand their businesses and potentially absorb more labor, triggering multiplier effects in the economic sector to advance public welfare. In terms of literature, this research contributes to enriching the discussion about the effect of reducing corporate tax rates on companies' tax avoidance, and it is expected to contribute to the development of tax accounting literature.

Relationship between Public Expenditure and Inflation

Effective management of inflation remains one of the arduous tasks for managers of global economies. Inflation remains a macroeconomic indicator whose management outcomes have the potential to decide the electoral fortunes of elected governments and determine the purchasing power of household incomes. The purpose of this research was to assess how a steady increase in public expenditure could impact inflationary levels. The quantitative approach to scientific inquiry was adapted and used in the research. Specifically, the cross-sectional design formed the basis of the research. Data required for the research were obtained mainly from secondary sources. These included textbooks, peer-reviewed articles published in journals and grey literature. Other sources were Google Search Engine, including Netcials, MacroTrends, and databases of the World Bank and Bank of Ghana, among other significant sources. Respective data on Ghana’s annual GDP values from 1960 through 2020, annual inflation data from 1965 through 2020, changes in annual inflation rates from 1965 through 2020, and annual public expenditure values from 1983 through 2020 were collected and used in the research. Descriptive statistics and regression models were used to describe the research variables and to evaluate their behaviour over the stated time frame on inflation. The study revealed lax monetary policy as the root cause of consistently high inflationary rates over considerable periods and remained a strong contributor to the weak purchasing power of national fiat currencies. Further, relative price distortions away from their economic equilibrium are not healthy for the economy, while disinflationary policies adapted for implementation should be contingent on the causes of inflation. The single largest cost of inflation to consumers is the erosion of income, whereas higher tax rates are not the panacea for the challenges of mounting public expenditure and public debts. Respective inflation rates recorded in Ghana during 2012 (7.13%) and 1995 (59.46%) remained the lowest and highest from 1993 through 2020. Fiscal periods 2017 through 2020, 2009 through 2012, and 2005 through 2008 recorded the respective best (9.33%), second-best (11.46%) and third-best (13.32%) annual average inflation rates. With the exception of 2013 through 2016, the performance of the Ghanaian economy in relation to annual average inflationary control witnessed improvements during the second political and administrative terms compared to the first terms. However, the best annual average inflation rate over an eight-year period during the Fourth Republic was recorded from 2009 through 2016 (13.45%). Findings from the research revealed a positive and significant relationship between public expenditure and inflation (coefficient value = 1.2004653; p = 0.004, p < 0.05). Public expenditure accounted for 21.30% of the variation in inflation rate from 1983 through 2020. Results from the statistical output validated the significant influence of public expenditure on inflationary hikes, the need for monetary and fiscal policies related to inflation control to be strategically reviewed and strengthened to improve implementation outcomes, and the potential of rising public expenditure to undermine the rigidity and robustness of economic fundamentals through an unexpected surge in inflationary levels. The findings underscored the need for managers of various global economies to be keen on “economic” public expenditure to the neglect of profligate public expenditure, so the socio-economic derivatives from investments in public infrastructure would strongly add to, rather than subtract from, national development and growth efforts. The fundamental objective of MPC should be pivoted around three cardinal functions: the creation of maximum employment, moderation of long-term interest rates and ensuring price stability. Excessive public expenditure requires careful consideration by economies that whet their national development appetite with increased public infrastructure projects.