Tax Increase Research Articles

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

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

Breaking the habit: The impact of tobacco taxation on smoking behavior

Objective: This study investigates the influence of tobacco prices on consumption habits among 200 smokers in Lisbon, Portugal, focusing on generational preferences and perceptions of tobacco taxes. Methods: A cross-sectional survey was conducted using a quantitative approach. Participants were categorized by generational cohort, and data on tobacco consumption types, awareness of tobacco taxes, and opinions on tax increases were collected. Statistical analyses were used to explore relationships and predictors. Results: Findings reveal that 46.5% of participants favored heated tobacco, 37.0% smoked cigarettes, and 16.5% consumed other types like roll-your-own tobacco and electronic cigarettes. Significant generational differences were observed, with older cohorts predominantly smoking cigarettes (51.5%), while Generation Z showed a preference for heated tobacco (55.2%). Most smokers (79.5%) were aware of tobacco taxes, with diverse opinions on their purpose: revenue generation (44.0%), consumption reduction (44.5%), and indifference (11.5%). Despite this awareness, 60.5% reported no change in consumption habits due to tax increases. Conclusion: The study underscores the complexity of tobacco consumption behaviors influenced by price and generational factors. While heated tobacco gains popularity among younger smokers, traditional cigarettes remain prevalent among older cohorts. The findings highlight challenges in tobacco control policies, suggesting a need for comprehensive strategies integrating price measures with targeted educational and cessation interventions to effectively reduce tobacco use across different generations.

Informal Employment, the Tertiary Sector, and the Gross Domestic Product: A Structural Equations Model for the Mexican Economy

In Mexico, approximately 55% of the working population is employed informally, contributing 24.4% to the Gross Domestic Product (GDP) in 2022. This study analyzed the impact of wages, taxes, government spending, and unemployment on the informal economy of Mexico from 1980 to 2022, as well as its relationship with the tertiary sector’s contribution to the GDP. The methodology of the study was structural equation modeling. The findings of this study revealed that an increase in taxes, the unemployment rate, and the minimum wage in Mexico tends to be accompanied by a rise in informal employment. Finally, a unitary change in the latent variable informality affected the growth of the tertiary sector’s contribution to the GDP by 0.37 units.

Downward Revision of Investment Decisions after Corporate Tax Hikes

This paper estimates the causal effect of corporate tax hikes on firm investment based on more than 1,400 local tax changes. By observing planned and realized investment volumes in a representative sample of German manufacturing firms, we can study how tax hikes induce firms to revise their investment decisions. On average, the share of firms that invest less than previously planned increases by 3 percentage points after a tax hike. This effect is twice as large during recessions. (JEL D22, E32, G31, H25, H32, H71, L60)

Ending the obesity epidemic: multidimensional challenges and effectiveness analysis of increasing taxes on fast food

With the continuous development of society, fast food has become a daily choice in modern society due to its high convenience. However, its high-calorie, high-sugar, high-fat, and low-nutrient characteristics significantly increase the risk of obesity. According to statistics, over 2.5 billion adults worldwide are overweight, and fast food consumption is recognized as an important factor driving the rise in obesity rates. This article delves into the multidimensional impact of fast food consumption on the global obesity rate and the effectiveness and challenges of controlling obesity through increasing fast food taxes. These policies face many difficulties in implementation, such as economic penalties that make it challenging to change consumption habits completely and may exacerbate the burden on low-income groups. In addition, Denmark’s saturated fat tax practice has shown that although tax policies can bring specific results, they have also caused problems such as increased unemployment and cross-border shopping. The article points out that relying solely on raising taxes is challenging to solve the problem of obesity, and multiple factors need to be considered comprehensively. The convenience, addiction, and extensive advertising coverage of fast food make it difficult for consumers, predominantly low-income and adolescent groups, to resist its temptation. Therefore, the government, businesses, and consumers need to work together to address the challenge of obesity through comprehensive measures such as strengthening health education, promoting healthy eating habits, and improving food production and processing technologies. This article also emphasizes that although tax increase measures can, to some extent, guide consumers to reduce their fast food intake, their effectiveness is limited and may lead to social and economic inequality issues. In the future, more innovative and comprehensive strategies should be explored to address the global obesity epidemic effectively.

Increased tobacco taxation associated with decreased consumption and bladder cancer incidence.

The temporal relationship between smoking exposure and bladder cancer (BC) diagnosis remains ill-defined. This study aims to cross-correlate and temporally associate changes in United States (US) tobacco tax and consumption with BC incidence. US tobacco consumption, tobacco tax data, and BC incidence rates from 1975-2019 were retrieved. A cross-correlation lag time for tobacco tax and consumption on BC incidence was calculated while controlling for national health expenditure. Proxied lag weighted semi-log linear models to determine the rate of change in BC incidence rates associated with a 1% change in tobacco tax percentages on a national and state level. A 1% increase in tobacco tax was associated with a 1.77% decrease in BC incidence over a 6-year period (R2=0.9687, p=0.00044). 22 states had a statistically significant decline in BC incidences correlated with increasing tobacco taxation. Reduction in BC incidence >0.5% were observed in states along the Western and Eastern US borders. Montana, Utah, Nebraska, Arkansas, and Tennessee did not have decreasing BC incidences from tobacco tax increases. California had the most drastic decline in BC incidence (1.98%). Nationally, tobacco consumption decrease in 1 pack per capita was associated with a 0.47% decrease in BC incidence over a 28-year period (R2=0.984, p=0.00011). Declining US tobacco consumption may indicate significant reduction in BC incidence through 2047. Primary prevention through adaptation of state-legislated tax changes may contribute to a reduction in BC incidence in states lying within the Central US. A national tobacco tax initative can be considered given the improvement in population health.

An overlooked market: loose cigarettes, informal vendors and their implications for tobacco taxation

ObjectiveTo examine the features of markets for loose cigarettes in several low-income and middle-income countries and their effects on tobacco control policies, particularly taxation.DesignAn analysis of survey data targeting people...

Anticipated property tax increases and the timing of home sales: Evidence from administrative data

AbstractThe infrequent reassessment of properties results in a divergence between the assessed values of current owners and prospective purchasers. This divergence is reduced when properties are reassessed, as is the tax “wedge” between current owners and prospective buyers. We examine how a reassessment‐induced reduction in this tax wedge affects home sales. Using data from Lexington, KY and our preferred approach, we find that reassessments are associated with an increase in sales of approximately 5%. Using an alternative approach, we find that a 10% increase in taxes due to reassessment increases the probability of a sale by 3%.

Optimization for container truck routing in container terminal with multi quay cranes considering emissions policy

In container terminal, the container trucks should go by a “quay crane - container trucks -import and export block” routing, and the optimization of this routing has become the focus of this paper. This study divided the problem of routing optimization into two levels: one is a routing optimization model of single container truck which takes the lowest total cost as the target, without considering the distribution of overall transportation task; the other is a routing optimization model concerning the allocation of no-load trucks, aiming at the lowest cost of transportation task. We designed an improved Particle Swarm Optimization (PSO) algorithm to solve the two-level optimization model, and the influence of emission policy on the two-level optimization model and the influence of the number of container trucks on the transportation distance of level II in optimization model are analyzed. The results show that the increase of carbon tax will lead to the decrease of emissions in level I, but has no effect on the emissions in level II. The increase in the number of container trucks will lead to a reduction of the no-load transportation distance in level II.

A systematic review and network meta-analysis of population-level interventions to tackle smoking behaviour.

This preregistered systematic review and meta-analysis (PROSPERO: CRD 42022311392) aimed to synthesize the effectiveness of all available population-level tobacco policies on smoking behaviour. Our search across 5 databases and leading organizational websites resulted in 9,925 records, with 476 studies meeting our inclusion criteria. In our narrative summary and both pairwise and network meta-analyses, we identified anti-smoking campaigns, health warnings and tax increases as the most effective tobacco policies for promoting smoking cessation. Flavour bans and free/discounted nicotine replacement therapy also showed statistically significant positive effects on quit rates. The network meta-analysis results further indicated that smoking bans, anti-tobacco campaigns and tax increases effectively reduced smoking prevalence. In addition, flavour bans significantly reduced e-cigarette consumption. Both the narrative summary and the meta-analyses revealed that smoking bans, tax increases and anti-tobacco campaigns were associated with reductions in tobacco consumption and sales. On the basis of the available evidence, anti-tobacco campaigns, smoking bans, health warnings and tax increases are probably the most effective policies for curbing smoking behaviour.

Widening the price gap: the effect of the Netherlands' 2020 tax increase on tobacco prices.

The public health impact of a tobacco tax increase depends on the extent to which the industry passes the increase onto consumers, also known as tax-pass through. In 2020, the Netherlands announced tax increases aimed to increase the retail price by €1 per 20 factory-made cigarettes and €2.50 per 50 grams of roll-your-own tobacco. This study examines the pass-through rate after the tax increase, and whether this differed by type of tobacco and brand segment. Self-reported prices of 117 tobacco brand varieties (cigarettes=72, roll-your-own=45) pre- and post-tax increase were extracted from the 2020 International Tobacco Control (ITC) Netherlands Surveys (n=2959 respondents). We calculated the tax pass-through rate per variant, examining differences between type of tobacco and brand segments. On average, cigarette prices increased by €1.12 (SD=0.49) (112% of €1) and roll-your-own prices by €2.53 (SD=0.60) (101% of €2.50). Evidence of differential shifting across segments was found, with evidence of overshifting in non-discount varieties. The average price of discount varieties increased with €0.20 less than non-discount varieties. Similarly, the net-of-tax price decreased in discount varieties (cigarettes=-€0.02; roll-your-own=-€0.05), but increased in non-discount varieties (cigarettes= +€0.14; roll-your-own= +€0.20). Despite the large tax increase, the industry increased prices in line or above the required level. Through differential shifting, the price gap between discount and non-discount varieties has widened, which may reduce the public health impact of the tax increase. Measures aimed at reducing price variability should be strengthened in taxation policy, such as the European Tobacco Tax Directive. We found that the industry used differential shifting after a significant tobacco tax increase in the Netherlands. Prices increased more than required in higher-priced products, but not in lower-priced products. This pattern was found both for factory-made cigarettes and roll-your-own tobacco. Through differential shifting, the industry undermines the potential public health impact of tobacco tax increases, by offering a relatively cheaper alternative, which discourages people to quit or reduce consumption. The revision of the European Tobacco Tax Directive (TTD) provides an opportunity to address the widening price gap - both between and within product segments - across the European Union.

State cigarette taxes, smoking cessation, and implications for the educational gradient in mortality

BackgroundRecent studies suggest that state policy, such as cigarette tax policy, is associated with variation in the educational gradient in mortality. However, it is unknown whether state cigarette taxes moderate the educational gradient in mortality directly by incentivizing smoking cessation. MethodsThis study uses 20 years of survey data from the Panel Study of Income Dynamics (N = 89,127 person-years; 751 deaths) merged with administrative data to examine the potential for a single state policy, cigarette taxes, to moderate the education-mortality association through influence on smoking cessation. ResultsIn mortality analyses, higher cigarette taxes are associated with a weaker educational gradient in mortality among smokers and overall. Smoking cessation analyses show higher state cigarette taxes increase the odds of quitting only for low-educated smokers, such that each $1 increase in taxes results in an additional 0.4 to 1 life years for low-educated smokers. For more educated subgroups, the association between state cigarette taxes and smoking cessation is confounded by broader temporal trends. DiscussionState cigarette taxes have potential to weaken the educational gradient in mortality by attenuating educational disparities in smoking cessation, however their direct effect is only on low-educated smokers. The findings help demonstrate how fundamental cause associations are contingent on state policy and vary over time.

Process simulation and techno-economic analysis of CO2 capture by coupling calcium looping with concentrated solar power in coal-fired power plant

The calcium looping (CaL) cycle is an effective high-temperature CO2 capture technology, its primary energy consumption arises from the calcination process, which limits the development of CaL technology. Utilizing concentrated solar power (CSP) instead of combustion for the calcination process in the CaL cycle can significantly reduce the energy penalty associated with CO2 capture of coal-fired power plants. Currently, the application of coupling CaL with concentrated solar power (CaL-CSP) systems in coal-fired power plants is still in its infancy, and there is limited research on its thermal performance and techno-economic analysis. In this study, a process simulation model of a 660 MW supercritical coal-fired power plant is developed as a reference. Subsequently, four different heat transfer routes are integrated into the design of CaL-CSP systems. The results indicate that the coupled power plant achieves a CO2 capture rate of 90 % compared to the reference coal-fired power plant, and reduces annual CO2 emissions by 93 % to only 58.2 g CO2/kWh. The CO2 capture energy penalty is 0.24 MJ/kg CO2. A sensitivity analysis of power generation cost reveals that if the cost of solar concentrator components is halved, the power generation cost will decrease to just 25 % higher than the reference power plant. Given the rapid advancements in CSP technology, this reduction is likely to be realized soon. Moreover, with the increase in carbon taxes and carbon prices, the power generation cost is expected to further decrease.

On increase of land tax in Kazakhstan

Land tax is one of the sources of formation of local budgets, filling their revenue part. The aim is to analyze the legal framework of the existing system of land taxation, to substantiate the need to increase mandatory payments for land. The following methods were used - monographic - to study the foreign experience of land taxation, statistical - to collect data on tax revenues, the state of the land fund, analytical - in the study of methods of tax payment, on the basis of abstract-logical method problems were identified and ways of their solution were proposed. Results - foreign experience of tax regulation has shown that fiscal policy is aimed at creating favorable preferential conditions for agricultural producers and improving soil quality. The existing domestic methodology of tax payments depending on the purposes of application is considered. The analysis of tax payments in dynamics for 7 years is presented. Land tax rates and rent in the context of target use are calculated. It is revealed that the tax for peasant (farm) farms in accordance with the income from the sale of agricultural products is not quite acceptable, as the costs of its production are not taken into account. Conclusions - it is established that a 40-fold increase in the land tax is premature, since to date such a measure is legislatively approved in the amount of 20-fold. It is recommended to increase the tax burden on residential lands for individual residential construction, shopping and entertainment centers and industrial facilities. Involvement in agricultural turnover of 62.5 million hectares of pastures, concentrated in the category of reserve lands, will make it possible to improve their quality level and receive additional money for the state budget.

Path to Green Economy: Analyzing Innovation, Investment and Taxation in Kazakhstan

The concept of a green economy has gained significant attention, aiming to achieve sustainable development without environmental harm. This study examines Kazakhstan's transition to a green economy, focusing on indicators such as green innovation, investment in environmental protection, and green taxes. Despite Kazakhstan's commitment to a carbon-neutral economy by 2060, significant challenges were identified. The methodology involved three steps: descriptive analysis of green economy indicators for 2016–2022, correlation analysis to identify significant relationships, and trend forecasting for 2023–2025 using a linear regression model. This approach provided a thorough examination of the green economy's current state and future projections. Over the study period, the number of organizations engaged in environmental innovation and their activity levels have decreased. Investments in environmental protection showed initial growth, but declined in recent years. Conversely, there has been an increase in environmental taxes, reflecting the government’s focus on tax instruments to promote sustainable development. Correlation analysis revealed complex interdependencies, indicating that higher investments and taxes are often associated with lower levels of green innovation activity. Projections for 2023-2025 suggest a further decline in green innovation indicators unless significant policy measures are taken. The study underscores the need for a balanced approach that encourages green innovation while maintaining robust investment and tax bases.

Economy-wide impact of a reduction in tobacco use in India

BackgroundPublic policy measures aimed at regulating tobacco use should consider the net gains for the nation, as the tobacco sector contributes to employment and tax revenue while also imposing substantial...

The Electoral Consequences of Tax Increases: Are Parties Punished for Raising Taxes?

Do governments presiding over tax increases lose votes? One assumption is tax increases affect incumbent parties equally but we also expect asymmetric responses with differing penalties for left- and right-wing parties. Influential literature also assumes voters incapable of assigning responsibility to policymakers or holding them accountable. We find that tax increases are more costly to a left-of-centre party. Previous research assessing this is hampered by a lack of comparable cases; however, our tests are conducted with results from thousands of English local elections across decades. We find tax increases by labour-controlled councils corresponded with a significant vote swing against labour. There were no effects of rate increases on votes for conservative-controlled or Lib Dem-controlled councils. These results have implications for how democratic elections may produce responsive governments, and we discuss why there may be an asymmetry, where there is more electoral responsiveness to tax increases by governments of the left.

Cultural norms and tax compliance: Evidence from China

Existing studies suggest that formal institutions can effectively constrain corporate tax evasion and increase tax compliance, but little has been said about the role of informal institutions regarding tax compliance. This study empirically examines the long-term effect of Confucian cultural norms on corporate tax compliance using unique cultural and historical data from China. We find that the intergenerational transmission of the Confucian culture can significantly promote the tax compliance of modern firms, thereby effectively reducing tax evasion. Simultaneously, the compliance effect is more pronounced in informal firms, such as small-scale, non-listed, and local firms. In terms of mechanism analysis, the normative effect of the Confucian culture is a key mechanism for explaining variations in corporate tax compliance behaviors under different cultural norms. Overall, this study fills a gap in the research on how informal institutions regulate the behavior of firms to a certain extent, and at the same time supplements the existing literature on understanding the long-term effects of the Confucian culture.

THE IMPACT OF TAXATION ON INTERNATIONAL COMMERCE AND EXCHANGE RATE ON IMPORTS

The globalization of capital markets has accelerated capital movements, turning the world into one large marketplace. International trade has become an important tool in shaping the financial structure of countries. However, elements such as customs duties and import quotas play a decisive role in trade between countries. Taxes, which are a financial policy tool of countries, are used to influence foreign trade, particularly imports. One of the determining factors in foreign trade activities is the exchange rate. The purpose of this study is to examine the effect of taxes on imports and the change in the nominal exchange rate on the import volume of goods and services. In this study, which examined 20 Organization for Economic Co-Operation and Development (OECD) countries with data for the period 1999-2021 taken from the World Bank official website, the model was analyzed with the help of AR (1) Residual Random Effects Generalized Least Squares Regression Model Estimator. The analysis revealed that increases in international trade taxes and exchange rate increases reduce the import volume. This result empirically supports the conclusion that taxes on international trade and reductions in exchange rates increase import volume.

STRATEGY TO INCREASE THE TAX RATIO THROUGH DIGITAL ECONOMY TAXATION: REVIEW OF LESSONS FROM ASEAN COUNTRIES

This study aims to investigate the effect of tax increase strategies on the Tax Revenue Ratio, moderated by the Digital Economy in Indonesia. The data used is panel data consisting of 60 observations over a specific period. The analysis was conducted using multiple linear regression methods and other statistical tests to examine the research hypotheses. The analysis results indicate that, although there are initially intriguing indications, there is insufficient statistical evidence to support a significant effect of the tax increase strategy on the Tax Revenue Ratio within the context of the sample studied. Similarly, the Digital Economy does not appear to have a significant influence on the Tax Revenue Ratio. Additionally, there is no significant moderating effect of the Digital Economy on the relationship between the tax increase strategy and the Tax Revenue Ratio. Nonetheless, this study's findings provide valuable insights for further understanding the dynamics between tax strategies, the digital economy, and the Tax Revenue Ratio. The policy implications of these findings underscore the need for further research and a deeper understanding of the factors influencing the Tax Revenue Ratio in Indonesia, particularly in facing the challenges and opportunities of the continuously evolving digital economy. Keywords: Tax Increase Strategy, Digital Economy, State Tax Revenue, Tax Policy, Digital Economy Dynamics