Tax Simplification Research Articles

GST Impact: Perspectives from Registered Traders’ in District Kangra, Himachal Pradesh

This research paper evaluates traders' perceptions of the Goods and Services Tax (GST) and its impact on business operations in District Kangra, Himachal Pradesh. A structured questionnaire was utilized to conduct a comprehensive survey involving four hundred respondents. The focus was on key aspects such as tax simplification, interstate and intrastate trade, pricing strategies, profit margins, transparency in tax collection, and accounting processes. The findings reveal a generally positive perception of GST, particularly in terms of its role in simplifying taxation and enhancing trade efficiency. However, challenges remain, especially concerning compliance issues and fluctuations in profit margins. To improve trader experiences, the study recommends targeted training programs, streamlined compliance processes, and the establishment of effective feedback mechanisms. These insights contribute to a deeper understanding of the real-world impact of GST on business operations and highlight essential areas for future improvement, underscoring the need for continuous support in adapting to the evolving tax landscape.

Assessing the initial impact of the Russian invasion on Ukrainian agriculture: Challenges, policy responses, and future prospects

The war in Ukraine has caused significant losses to the Ukrainian agricultural sector and threatened global food security. This study aims to comprehensively analyse the impact of the Russian invasion on Ukrainian agriculture in its initial phase, examine the responses of Ukrainian agricultural policy and outline key elements for the post-war development of the Ukrainian agricultural sector. Using a systematic approach that includes thorough data collection and analysis from official sources, the Ukrainian press, relevant legislation and statistical data, our study focuses on the first five months of the conflict, from February 24, 2022 to July 24, 2022, to identify the main challenges during this period. The agricultural policy analysis shows that the Ukrainian government has adopted a reactive approach, including tax simplification, affordable credit, deregulation, financial support for the agricultural sector, reduced prices for inputs and resources to support farmers, and improvements in logistics. Critical factors identified for post-war development include repatriation and agricultural education, support for small and medium-sized farms, integration into global markets, emphasis on organic practices and sustainable development, and digitalization in agriculture. The integration of a systematic overview of the Ukrainian agricultural sector and an analysis of key elements of post-war development provides essential insights for policy-makers and researchers concerned with the impact of war on the agricultural sector and food security.

Do institutions advocate tax simplification? Insights from a panel of 88 countries

Do institutions advocate tax simplification? Insights from a panel of 88 countries

The U.S. Federal and State Tax Simplification and Reform for Senior Citizens

The U.S. Federal and State Tax Simplification and Reform for Senior Citizens

BEFIT: A Blast From the Past or a Modernized Approach to Tax Simplification?

In this note, the author discusses the Draft “Business in Europe: Framework for Income Taxation (BEFIT)” proposal and its mechanics. Apart from providing an overview of how the draft Directive is expected to operate, attention is given to the regime applicable to cross-border tax loss relief and the differences and potential similarities between BEFIT and prior similar attempts of the European Commission – namely the Common (Consolidated) Corporate Tax Base proposals.

A Critical Analysis of Pakistan's Budget 2023-24: The Fiscal Challenges

The paper presents a comprehensive analysis of Pakistan's Budget 2023-24 and its fiscal landscape, sketching the challenges and opportunities within its revenue generation, economic growth, and debt management. The primary challenge facing Pakistan’s economy is the gap between government revenue and expenditures. The country faces hurdles in tax collection, marked by a complex tax system, tax evasion, and discrepancies impacting the middle and lower-income classes. A mixed research method was used in conducting this study, analysis of fiscal data, extensive literature review, and consultations with economic experts. An in-depth analysis of Pakistan's revenue sources, inflationary trends, budget deficits, and global economic conditions was conducted. The results show a complex web of challenges in Pakistan's fiscal framework, the gap between revenue collection and government spending, high inflation rates, the imbalance between exports and imports, encircling tax evasion, and an intricate tax system. The paper offers a sequence of strategic reforms, emphasizing expense reduction, tax simplification policy, political and legislative reforms, and encouraging investment for economic stability. It also highlights the need for coordination among government organizations, strategies to attract Foreign Direct Investment (FDI), and endorsing Human Resource Development (HRD) for a skilled workforce. The analysis highlights the importance of reforms in the governance structure, taxation system, and spending to achieve stability and economic growth in the country.

Simplification of Local Taxes as an Optimization of the Budgetary Function in an Effort to Restore the National Economy in Lampung Province

Inequality of regional income with one another, hampers the development process in several regions and has not increased regional independence due to dependence on transfer of funds from the central government. This happens because the local government has not been able to optimize the source of local revenue, namely local taxes to increase local revenue. With this situation, the government seeks to simplify the local taxation system including tax types, tax rates. Regional independence is also expected to increase regional financial capacity which will have an impact on the recovery of the national economy after the pandemic. This research will be conducted normatively empirically, namely combining normative legal elements with the review of laws and regulations relating to the simplification of local taxes, which are then supported by the addition of empirical data or elements through socio-legal, statute and conceptual approaches. Based on the above, this research is expected to contribute suggestions for the implementation of regional tax simplification in Lampung Province so that the implementation of regional tax simplification can be optimal and have a positive impact on increasing regional financial capacity.

Kantian–Nashian interaction and petty tax corruption in developing countries

PurposeThis paper attempts to develop a simple, static model of tax administration that is capable of explaining the widespread collusive petty tax administration corruption observed in developing countries.Design/methodology/approachThis paper utilizes a positivist research framework and adopts a theoretical method of analysis, although secondary data will also be mentioned to support theoretical arguments whenever it is appropriate to do so.FindingsA high rate of collusive tax corruption is inevitable in developing countries.Research limitations/implicationsThe model is static and needs to be extended into a dynamic model.Practical implicationsTraditional enforcement tools such as higher audits or a higher penalty regime against tax evasion do not work. Tax simplification can lessen the incidence of tax corruption.Social implicationsFighting tax corruption requires significant changes in the attitudes of taxpayers and tax auditors.Originality/valueThis paper combines the literature on Kantian economics and tax compliance in an innovative fashion.

Does Tax Simplification Motivate Small Businesses to be More Compliant? Evidence from a Regression Discontinuity in Indonesia

This research investigates how the tax simplification program in Indonesia affects tax compliance among small businesses, by employing a regression discontinuity design and examining various parameters of tax compliance. The results indicate that tax simplification does not significantly influence tax payment behaviour. However, it does have a positive effect on overall tax compliance, demonstrated by more frequent reporting and fewer penalties imposed. Analysis of heterogeneous treatment effects reveals considerable variation across geographic areas and internet access levels. Taxpayers in areas with decent internet access and near a tax office appear to benefit more from the program.

Pakistan: One Year Growth Strategy


 Focus on Investment, productivity, and exports.
 Remove bottlenecks linked to terrifs, sludge: cost of regulation, financial &energy constraints.
 Initiate “Regulatory Audit”.
 Reduce bank’s holding of the government securities.
 Create a National Debt Management Office.
 Revisit DISCO’s management.
 Introduce pre-paid metering.
 Do away from uniform energy tariffs.
 Introduce wheeling and bilateral agreements.
 Tax Simplification
 Implement Point of Sale (POS)
 Deregulate the real estate market by eliminating NOCs and FBR/DC rates.
 Tie Real estate & city development.
 Unlock dead capital.
 Internet for all.
 Youth Involvement—promote sports, culture & clubs
 Promote street vending—huge employment generation.

Management of Business Activity of Territorial Communities: Case of Ukraine

The article analyzes challenges and prospects of development of business activity of territorial communities (hereinafter – TC) in terms of decentralization. Particular attention is paid to the extension of the opportunities for entrepreneurs due to the establishment of TC and in the context of implementation of the European Green Deal. The principal powers concerning support of economic development, solving environmental problems and supply of social services on the territory are delegated to the local bodies. It is a positive aspect, but it requires improvement of human resources of the local governmental bodies to secure efficient use of the provided opportunities. The research substantiates directions of business activation in TC, particularly creation of favorable environment for enterprises development at the state level, supply of broader access to financing for small and medium-size enterprises, simplification of tax administrating for small and medium-size enterprises, promotion of business culture and development of business skills and sustainable thinking, support for internationalization and greening of small and medium-size business, improvement of competitive capacity and innovative potential of enterprises. The work suggests a model of efficient management of business activity of territorial communities. The authors define the principal criteria for setting local taxes and charges at the level of community. The research also marks the problems that have a negative impact on business development of TC, particularly, restraints for business running, development of local infrastructure, and employment of population. The article specifies the reasons and factors of the obstacles appearance and proposes the ways for them overcoming.

Tax Simplification: A Comparison between the Portuguese and the Spanish Regimes

This article compares the Portuguese and the Spanish simplified tax regimes (STRs) with regard to personal income taxation. In Portugal, the regime has become more equitable and increasingly uses information technology. In Spain, the modular regime is complex and could occasion evasion. Accordingly, Spain should consider abandoning its current STR.

The Digital Transformation of Tax Systems Progress, Pitfalls, and Protection in a Danish Context

Abstract: The authors examine possibilities and challenges in using digital tools to obtain tax simplification and to improve tax assessment, collection, and transparency. Hence, the main objectives of the article are, from a legal perspective, to shed additional light on the relations between tax administrations and taxpayers in an increasingly digitalized world and to discuss how this development may influence taxpayers' rights and the overall efficiency of tax systems. In doing so, practical experiences—incurred in Denmark during its journey from a paper-based and manual tax administration process toward a more digitalized one—are analyzed. Against this background, it is concluded that many states around the world, including Denmark, have come a long way in making tax processes smoother and more efficient through the use of digital tools for the benefit of both taxpayers and tax administrations. However, at the same time, global as well as Danish experiences clearly show that states, in their pursuit to digitalize tax administrations further, need to take appropriate measures into consideration in order to ensure the legality and transparency of the digital tax administration processes.

Faktor Pengaruh Harga Obligasi di Bursa Efek Indonesia

The Indonesian government has issued Government Regulation (PP) Number 9 of 2021 concerning tax simplification. One of the PPh clauses stipulates a reduction in bond PPh rates. Bond prices will fluctuate, the amount of fluctuation depends on demand, supply, and interest rates in the market. To find out the factors and conditions that influence then conducted research. The method used in writing this article is a literature review. The journals used in the literature review totaled eight journals which were obtained through Google Scholar and Google Search. The research results show that bond prices are an important structure in bond instruments. The formation of the price of a bond is determined by various factors including coupon rate, issuer's rating, maturity period, and bond liquidity. Bond prices can change if the factors that influence them are significant to bond prices, bond prices will decrease if investors' expectations of interest rates rise. Conversely, bond prices will rise if investors' expectations of interest rates fall. several macroeconomic factors that can affect bond prices such as inflation, interest rates, etc.

Tax avoidance and evasion in a dynamic setting

We study an intertemporal utility maximization problem where taxpayers can engage in both tax avoidance and tax evasion. Evasion is costless but is fined if discovered, while avoidance is costly but might be successful (i.e. deemed legitimate) with a given probability (β) upon audit. We find that traditional deterrence instruments (fine and frequency of audit) reduce optimal evasion but, in contrast with results in a static framework, they have no impact on optimal avoidance. In fact, tax avoidance depends negatively on its marginal cost and positively on both its probability of success (β) and the tax rate. We show that non-compliance behavior may result in a Laffer curve for fiscal revenues and that the revenue maximizing tax rate is lower the higher β. We characterize the optimal level of β by taking into account different government objectives: minimizing evasion, minimizing non-compliance (evasion plus avoidance), or maximizing revenues. Our results suggest that specific policies (e.g., tax simplification) need to be implemented to deter avoidance and we illustrate their impact on evasion.

Taxing Middle Class Trust(s)

The Internal Revenue Code is, by all accounts, the Inequitable Revenue Code. The middle class bears a disproportionately high percentage of the overall tax burden, in part, because complex interactions of various provisions of the Code produce unintended results. Tax simplification addresses this aspect of inequity, and so it is a centerpiece of tax reform. Simplification itself, however, can produce unintended complexity and exacerbate inequity if the drafting and interpretation of the simplification provisions are removed from the realities to which they will apply.A prime example of unintended inequity brought about by tax simplification is section 67(e). Section 67 denies individuals a deduction for specified expenditures (labeled “miscellaneous itemized deductions”) except to the extent that they exceed 2% of that individual’s adjusted gross income. Section 67(e) extends this “deduction reduction” to trusts except for expenditures that “. . . would not have been incurred if the property were not held in [trust].” The purpose of section 67(e), as its language suggests, was to assure that section 67’s “deduction reduction” could not be circumvented by placing income producing assets in trust. Yet section 67(e), as it is presently interpreted, affords a tax advantage to trusts established by taxpayers wealthy enough to accumulate income for future generations and at the same time disadvantages those who establish smaller trusts for non-tax purposes as well as outright owners.

DEVELOPMENT OF THE SYSTEM OF TAX ADMINISTRATORS IN UKRAINE

The aim of the article is to analyze the development of the tax administrators` system in Ukraine in the current conditions of Ukrainian financial system development. The administration of taxes and fees is a dynamic process. The quality of its implementation characterizes the activity of the tax administrators` system with the use of certain tools for the implementation of state tax policy for customs and tax control. In addition, it is a special type of tax activity, a constant and necessary component, the organization of which is due primarily to the needs of public fiscal policy. The analysis of organizational bases of activity of tax payments administrators` system is carried out. It is noted that the functions assigned to public authorities for the administration of tax payments in Ukraine are largely in line with international practice of tax administration. In the activities of the fiscal service, control aimed at ensuring compliance with the requirements of current tax legislation by all participants in tax relations, identifying the facts of its violations and ensuring their elimination is of particular importance. The work of tax authorities to conduct control significantly affects the conditions of doing business in Ukraine. In the first place it is necessary to put the legitimacy of the actions of controllers and the legitimacy of the goals they plan to achieve. Any law aimed at improving the work of tax authorities with taxpayers will be leveled in case of violation of the law by the tax administrator in the performance of control functions. Taxpayers, regardless of their field of activity, should be aware that honest payment of taxes guarantees the protection of their rights and protects them from illegal claims or actions of tax authorities. It is determined that to implement the strategic direction – effective administration of taxes, fees, and customs duties, it is necessary to define the main goals, in particular – simplification of tax and fee administration, expanding the tax base by limiting tax avoidance, improving, and centralizing tax and fee administration procedures. Keywords: tax service, tax administration, tax payments, tax administrators, tax system, tax work.

English

Making Tax Digital (MTD), an initiative announced in 2015 by MP George Osborne in his autumn statement, brings with it the most impactful change to the UK tax administration for a generation. The Making Tax Digital vision aims to revolutionise the way businesses, landlords, individuals, and tax accountants interact with Her Majesty’s Revenue and Customs (HMRC). Making Tax Digital is intended to aid the government’s tax simplification agenda, which commits to making the UK tax system fully digitalised. Given this background, this research aims to examine the impact of making tax digital. This research has used a combination of primary quantitative and qualitative data that is triangulated across taxpayers, accountants and interdisciplinary practitioners. Questionnaires and semi-structured interviews were employed to collect raw data from a sample of 202 taxpayers, 20 accounting and 4 interdisciplinary practitioners. A particular need identified is for support and clearer guidance on compliance for the 3.5 million sole trader businesses which generate £1.9 trillion of wealth for the United Kingdom. This has to be backed by a strong anti-avoidance business support system for sole proprietary businesses to enable then to adapt to new way of reporting and paying taxes.  It is further recommended that HMRC develops a strong communication strategy that encourages and helps sole trader overcome challenges of Making Tax Digital.   Key word: Digital taxation, Making Tax Digital, tax policy.

Performance of tax simplification around the world: A panel frontier analysis

A complex tax system may affect the ease of doing business in a specific country through rising fixed cost and the opportunity cost of taxpayers' time, thus constituting a barrier to foreign direct investment and entrepreneurship. This study observes the tax competitiveness in its tax complexity dimension, by covering 88 countries over timespan 2005–2016 and proposing the panel data nonparametric frontier method [1,2] for the model without explicit output (hereafter, panel data DEA-WEO). A thorough view on tax simplification performance was conducted by measuring the efficiency (both contemporaneous and long-run analysis), which allows producing a ranking, and examining the productivity change of these tax systems. Findings show the uptrend of tax systems' relative efficiency through years, from 31.2% (2005) to 52.6% (2016), along with an increasing convergence of the tax simplification trend. Switzerland was found to be the most efficient country, considering long-run performance; however, Norway appeared to have the most feasible practice and model in the segment. It was also found that the average productivity progress of tax simplification for both periods, 2006–2011 and 2011–2016, was 27.7% and 19.6%, respectively. The robustness analysis finds the positive impact of some macro environment-related factors on tax simplification performance, consolidating and validating the tax competitiveness insight of these tax systems.

Simple rules and the Political Economy of Income Taxation: the strengths of a uniform expense rule

The complexity of the U.S. income tax system emerged in part from the differentiated fiscal treatment of specific investments and various sorts of business expenditures that, as Richard Wagner says, creates “a tax code so large that no one can read it and which creates nearly a unique tax liability for each taxpayer.” While tax scholarship documents the costs of complexity, current scholarship lacks a normative legal theory that could inspire an alternative to this practice of targeted credits and deduction rules. This paper builds on Epstein’s general Simple Rules framework to develop a radical simplification of income tax: the operationalization of a uniform expense rule, i.e., the application of a single deduction scheme across all expenses and investments. With regard to the trade-off between targeted rules and this general approach, this paper investigates the nature of a uniform expense rule and reveals its strengths with respect to political economy. First, a stable and universal expense rule would narrow the scope of politicians’ ability to concentrate benefits on special-interest groups and would limit rent-seeking. The abolition of deviating rules for investments would restrict the scope of tax optimization, meaning that individual and corporate tax liabilities would be more determined by the ability to pay them. The same policy would save companies and government millions of dollars that they currently spend on tax compliance and administration of the tax system, respectively. Last, a deduction rule that applies across all businesses and industries would be less price distortive and thus would enhance the quality of the price signal.