Tax Increase Research Articles

Optimal parental leave subsidization with endogenous fertility and growth

AbstractWe examine the growth and welfare effects of parental leave subsidization in a life‐cycle dynastic model with human capital externality. Such externality causes higher fertility, less parental time and expenditure on child human capital, and lower growth and welfare than the efficient levels. Efficient policies require subsidizing work leave, which includes parental leave, and labor income financed by a lump‐sum tax. Calibration based on the U.S. data implies that a fully‐covered leave duration of 7.8 weeks per parent financed by an increase in labor income tax would increase the annual growth rate by 0.06 percentage points and welfare by 0.027%.

Emotional reactions to climate change: a comparison across France, Germany, Norway, and the United Kingdom.

We present a study of emotional reactions to climate change utilizing representative samples from France, Germany, Norway, and the United Kingdom (UK). Drawing on appraisal theories of emotion, we examine relations between appraisals, emotions, and behavioral intentions in the context of climate change. We compare the four countries concerning emotional differences and commonalities and relate our findings to pertinent models of cultural values. Five distinct emotions were measured: worry, hope, fear, outrage, and guilt. In addition, the survey asked respondents to appraise a set of climate-related statements, such as the causality of climate change, or the efficacy of mitigation efforts. Also, a set of climate-relevant actions, such as willingness to reduce energy consumption or support for climate policies, was assessed. Findings show that appraisals of human causation and moral concern were associated with worry and outrage, and appraisals of efficacy and technological solutions were associated with hope. Worry and outrage are associated with intentions to reduce one's energy consumption, whereas hope and guilt are related to support for policies such as tax and price increases. A country comparison shows that French respondents score high on outrage and worry and tend to engage in individual behaviors to mitigate climate change, whereas Norwegian respondents score high on hope and show a tendency to support policies of cost increase. Generally, worry is the most and guilt the least intense emotion. Moral concerns and perceived collective efficacy of one's country in addressing climate change are relatively strong in France, while beliefs in human causation and in negative impacts of climate change prevail in Germany, and confidence in technological solutions are prevalent in Norway. In sum, findings reveal typical patterns of emotional responses in the four countries and confirm systematic associations between emotions and appraisals as well as between emotions and behaviors. Relating these findings to models of cultural values reveals that Norway, endorsing secular and egalitarian values, is characterized by hope and confidence in technological solutions, whereas France and Germany, emphasizing relatively more hierarchical and traditional values, are rather characterized by fear, outrage, and support for behavioral restrictions imposed by climate change policies.

Do corporate taxes affect employee welfare? Evidence from workplace safety

We examine the impact of tax policy on worker safety that exploits spatial discontinuity in treatment and control establishments stemming from state-level corporate tax changes. The granularity of our data and econometric approach allows us to exploit within-firm, across-establishment variation in worker safety shedding light on the real effects of headquarter versus plant-level decisions. Plant-level injury rates increase with tax hikes in establishment states, but not with those in headquarter states, highlighting the importance of plant-level decisions. We explore three plausible non-mutually exclusive mechanisms to help explain these findings ─ safety investment, leverage, and labor stress channels. We find that in the presence of a tax hike, firms reduce safety-related investments, and the tax effect on injury rates is exacerbated for firms that increase leverage and for firms where employees work longer hours and seasonal workers are used. Overall, our findings suggest that tax increases lead to negative welfare outcomes for employees, with no similar benefit accruing for tax cuts.

Delaying the Implementation of Carbon Tax in Indonesia: A Critical Review of the Harmonization of Tax Regulations

<em>The implementation of carbon tax has been postponed twice by the government based on the mandate of Articles 13 and 17 of Law No. 7/2021 on Harmonization of Tax Regulations. However, it is unclear how long these delays will last, raising questions about compliance with existing regulations. The postponement of carbon tax implementation based on existing regulations in the Harmonization of Tax Regulations raises concerns regarding compliance with the mandate of the law. The reason for the delay given by the government also needs to be further evaluated to ensure policy consistency and transparency in decision-making. This research aims to analyze the postponement of carbon tax implementation based on the regulations listed in the Taxation Regulations Harmonization Act, as well as identify the reasons for the postponement given by the government. This research method uses normative juridical, qualitative methods by reviewing literature, related rules, and regulations,Reasons for the delay given by the government include caution against a fragile economic recovery and a spike in energy prices. However, these reasons were also used to postpone the increase in the value-added tax (PPN) rate, potentially raising questions about compliance with regulations.</em>

Effectiveness And Strategies Hotel’s Tax Problems In Baubau City

This study attempts to explain the problem of hotel tax in Indonesia especially in Baubau City. With a mixed research design. Sequential explanatory strategy type. To determine the effect of hotel tax effectiveness on local revenue (PAD) in Baubau City, this study used a quantitative design with a survey using a correlation approach. Meanwhile, to find out the strategy to increase hotel taxes using a qualitative design. The results of this study found that only a 2.52% increase in Baubau City's PAD in 2018-2020 was influenced by hotel tax effectiveness. The tax increase strategy carried out both intensification and extensification by the Baubau City BPKAD has many weaknesses so that it has an impact on many obstacles to efforts to increase taxes. No strategy changes have been made to increase hotel tax revenues, including in the face of the COVID-19 pandemic

Smoking prevention that increases tax revenue: tobacco taxes in the Czech Republic 2004-2020.

Increasing tobacco excise tax is one of the most effective smoking-prevention tools. The aim of the study is to assess the use of this tool in the Czech Republic (CR) by studying trends in cigarette taxes, prices, tax revenue, and the affordability of cigarettes in the CR. Data on cigarette consumption, their tax rates, price, and tax revenue in the CR for 2004-2020 come from multiple sources. We used the consumer price index to convert nominal values to real values. Given an average daily consumption of 12.7 cigarettes per smoker, the affordability of cigarettes was measured as a percentage of the average monthly wage needed to buy 19 cigarette packs. Despite recent increases in excise taxes, cigarettes in the CR are becoming more affordable. We found that the affordability of cigarettes was greater in 2020 than in 2008. The values of both the specific and the minimum excise taxes are currently being eroded by inflation. Cigarette consumption has declined from 2015 to 2020, and the government still received a bit more excise tax revenue due to its earlier tax policy. However, if taxes are not increased further, the revenue will start to decline. Despite the trend of increasing tobacco taxes in the CR, both the affordability of cigarettes and their use are still high in the country. This means that the CR is not using tax policy effectively enough to reduce smoking prevalence. It needs a substantial and sudden tax increase, in addition to the currently planned tax increases, to reduce smoking prevalence and lower the burden of tobacco use in the economy. Such a move would not only improve public health in the CR, but also increase government revenue.

Cutback management strategies and citizen evaluation of government

AbstractThrough a behavioral approach, citizen evaluations of government performance have been an area of study in public administration. Research has explored how different factors influence citizens’ perceptions of public organizations, such as public sector bias and reference points. Understudied in this literature is how citizens evaluate government based on their use of financial management strategies. The Pandemic and other economic challenges have forced governments to engage in cutback management strategies to balance the budget. How do citizens evaluate governments based on their cutback strategies? To answer this theoretical question, we employ a survey experiment design with over 1600 respondents from the U.S. to explore how four cutback management strategies can influence citizen evaluations of government. Our findings suggest that cutback management strategies do influence citizens’ evaluation of government in trust, satisfaction, performance, and fairness. Citizens are more favorable to infrastructure or materials and contractor cuts than increasing taxes or reducing personnel. Further analysis by respondent partisanship indicates Democrats are more accepting of tax increases. Republicans rate governments lower when they cut capital and infrastructure and rate governments higher when they decrease personnel expenditures.

Brain Drain, A Modern Issue for the EU

The brain-drain phenomenon refers to the global moving of skilled alumni in order to ensure better work opportunities and higher salaries (Oxford Learner's Dictionaries, 2023). Its main effect is the loss of human capital in the mother countries, in which gaps in the workforce are being created, leaving the spots for people with lower qualifications. The lost income will cause a tax increase leading to the payment inability and to an overall worsening of the economy. The last result is what makes the phenomenon so important. The economy and the education are the foundations of a country and with the worsening of the first in the fields of home industries, the public services are facing a failure, the state providing less to its people (Young, 2021).

Intergovernmental grants and local public finance: An empirical examination in Israel

What is the overall effect of intergovernmental grants on local public finance? While previous studies show an asymmetric effect of changes in intergovernmental grants on local taxation, other budgetary variables are often neglected. We take advantage of a 2011 Israeli reform in the context of a centralized country, which resulted in reduced intergovernmental grants for some local governments and increases for others, and analyse the overall effect on local spending, taxation, and deficits, using event study and difference-in-differences methodologies. Our results show that grant reductions led local governments to increase local tax rates and their annual deficits, but did not change local spending levels while revealing the mechanism behind rates adjustments. Local governments which experienced an increase in their grants increased their expenditures and lowered their tax rates and deficit levels. We find an asymmetric effect on tax rates: a grant reduction causes a tax hike which is twice as large as the tax reductions following a grant increase. This asymmetric effect can create tax hikes when grants decrease and then increase to their original level. Our results help establish the effect of intergovernmental grants on local taxation, and their effect on expenditure and fiscal balance in a centralized country.

The impact of VAT tax sharing on industrial pollution in China

Contrary to the Chinese central government's strong encouragement of green development, the initiative of local governments in pollution control remains inefficient. This phenomena may be associated with Chinese special tax sharing system. Based on the practice of China's sub-provincial fiscal system reform from 2003 to 2020, this paper examines the impact of sub-provincial revenue share on industrial pollution at the prefecture level, and explores the influence of fiscal incentives caused by VAT tax sharing on local government decision-making. First, we study the effect of VAT tax sharing on industrial pollution through fixed effect model. We find that the increase in VAT tax sharing promotes environmental pollution, especially in the central and western regions. In addition, we analyze the moderating effects of industrialization and government competition on the industrial pollution effect of VAT tax sharing. The results show that the degree of regional industrialization strengthens the pollution effect caused by the increase of VAT sharing, while the government competition weakens the effect. Based on these findings, we also employ the panel threshold model to investigate the nonlinear effects of VAT tax sharing and industrial pollution. Only when the proportion of VAT tax sharing exceeds the threshold value will it have an impact on industrial pollution. This study provides enrich empirical evidence for the successive problems of extreme environmental pollution from the perspective of fiscal revenue decentralization, which is of practical importance for improving tax sharing system and enhancing pollution control efficiency.

Asymmetric responses to severance tax changes: Coal production in West Virginia

I use aggregate and mine-level data to analyze changes in coal production due to West Virginia imposing a 56 cent per short ton severance tax in 2005, as well as the effect of the tax's subsequent repeal in 2016. To do so, I construct a dataset of quarterly coal production for West Virginia and neighboring control states not exposed to changes in severance tax policy. Difference-in-differences results suggest that the severance tax increase had no significant effect on either aggregate or mine-level production. Conversely, I find that the severance tax decrease led to an 11.8% increase in aggregate coal production and a 24.4% increase in mine-level production.

Environmental tax evasion as a determinant of the Porter and pollution haven hypotheses in a corrupt political system

The Porter hypothesis is not very statistically significant, especially in developing countries. This is likely because it overlooks environmental-policy-related bribes, and reducing the regulatory cost burden through bribes can encourage innovation. Moreover, the more competitive are the international markets, the more likely is it for firms to bribe officials in making export decisions. This study identifies a theoretical mechanism for this hypothesis by analyzing the effects of trade environmental policies and bribes associated with tax evasion on pollution, growth, and productivity in an R&D-based growth model considering exporting firms that engage in environmental tax evasion. The analysis yields a weak Porter hypothesis wherein an increase in environmental tax for exporting firms leads to economic growth and pollution reduction. Then, the greasing-the-wheel-of-trade and sanding-the-wheel-of-trade hypotheses are compatible. The different results of trade and environmental policies’ effects on each developing country’s green innovation are likely due to the political institutions’ maturity.

A tragedy of the horizons? An intertemporal perspective on public support for carbon taxes

Most collective dilemmas—that is, situations in which private interests contrast with collective interests—have an embedded intertemporal component in that they often imply that the rewards from defection are immediate but the rewards from cooperation are delayed and often accrue to people in the future. This also applies to carbon taxes since they imply additional individual costs for benefits which will mostly be enjoyed by future generations, which undermines their political support. In an experiment on a representative sample of 1000 United States adults, we presented individuals with twelve alternative carbon tax formulations with varying start dates, temporal horizons of carbon abatement objectives and revenue uses. We find that public support is highest when individuals can pre-commit to policies that start a few years into the future and for policies that express their emission cuts objectives in more distant and ambitious terms —i.e. achieving carbon neutrality by 2050 as opposed to halving emissions by 2030. Individual temporal discounting, exogenously measured, account for large part of these preferences. These preferences are in contrast with the most efficient policy, which is the one that starts immediately and distributes equitably mitigation costs across time. We find two ways to realign preferences with it. First, the most efficient policy becomes politically feasible when the tax includes a dividend that is redistributed to citizens. Delivering an economic compensation at the same time of the individual costs of the tax neutralizes the effect of individual discounting and of the policy's temporal context on tax support. Secondly, when the price of the carbon tax is adjusted upward to compensate for the opportunity cost of delaying its introduction, individuals start trading off its delay with avoidance of tax increases.

Energy taxes, energy innovation, and green sustainability: empirical analysis from a China perspective.

The idea that energy taxes and innovation may contribute to lowering greenhouse gas emissions and fostering the development of a more sustainable energy future is gaining popularity. Therefore, the study's main goal is to explore the asymmetric impact of energy taxes and innovation on CO2 emissions in China by employing linear and nonlinear ARDL econometric methods. The outcomes of the linear model demonstrate that long-term increases in energy taxes, energy technological innovation, and financial development cause CO2 emissions to reduce, while increases in economic development cause CO2 emissions to climb. Similarly, energy taxes and energy technological innovation cause CO2 emissions to fall in the short run, while financial development promotes CO2 emissions. On the other hand, in the nonlinear model, the positive energy changes, positive energy innovation changes, financial development, and human capital help reduce the long-run CO2 emissions, and economic development increase the CO2 emissions. In the short run, the positive energy and innovation changes are negatively and significantly connected to CO2 emissions, while financial development is positively linked to CO2 emissions. The negative energy innovation changes are insignificant in both the short and long run. Therefore, Chinese policymakers should try to promote energy taxes and innovations as tools to achieve green sustainability.

Shadow economy–financial sustainability nexus: the case of Palestine

PurposeThe present research aims at identifying the latent factors that are driving the rise of the shadow economy in Palestine, assesses its magnitude from 1998 to 2021 and investigates the influence that its size has on the financial sustainability of Palestine's public budget.Design/methodology/approachThe researchers employed the multi-indicator multi-causes (MIMIC) model to estimate the size of the shadow economy and investigate its effect on the financial sustainability of the public budget. Economic factors such as direct taxes, indirect taxes, government welfare, government spending and unemployment were considered causal variables, while indicators of financial sustainability included budget deficit, public debt and gross domestic product (GDP). The shadow economy served as an intermediary variable.FindingsBased on the findings, the researchers recommend regulating and formalizing legitimate activities within the shadow economy. Additionally, they suggest promoting investment projects to reduce unemployment rates, lowering taxes on essential goods and consumer items and providing support to local producers in Palestine. These measures aim at addressing the challenges posed by the shadow economy and fostering economic stability.Originality/valueThe study reveals that the average size of the shadow economy in Palestine between 1998 and 2021 was 43.80%, fluctuating within the range of 39.92%–46.30%. It further establishes that an increase in direct and indirect taxes as well as unemployment contributes to the expansion of the shadow economy. Conversely, government welfare and spending exert a diminishing effect. Moreover, the study finds that the rise of the shadow economy correlates with an increase in public debt, budget deficit and GDP, indicating a negative impact on the financial sustainability of the public budget.

Public finance in South Africa: Tax compliance and behavioural responses to tax increases

Public finance in South Africa: Tax compliance and behavioural responses to tax increases

Preferences and values for government policies on infectious disease outbreaks and epidemics for the Japanese population: a conjoint analysis

AimsTo investigate the preferences of the Japanese population for government policies expected to address infectious disease outbreaks and epidemics.MethodsWe performed a conjoint analysis based on survey data in December 2022 (registration number: UMIN000049665). The attributes for the conjoint analysis were policies: tests, vaccines, therapeutic drugs, behavior restrictions (e.g. self-restraint or restrictions on the gathering or travel of individuals and the hours of operation or serving of alcoholic beverages in food/beverage establishments), and entry restrictions (from abroad), and monetary attribute: an increase in the consumption tax from the current 10%, to estimate the monetary value of the policies. A logistic regression model was used for the analysis.ResultsData were collected from 2,185 respondents. The accessibility of tests, vaccines, and therapeutic drugs was preferred regardless of the accessibility level. The value for accessibility of drugs to anyone at any medical facility was estimated at 4.80% of a consumption tax rate, equivalent to JPY 10.5 trillion, which was the highest among the policies evaluated in this study. The values for implementing behavior or entry restrictions were negative or lower than those for tests, vaccines, and drugs.LimitationsRespondents chosen from an online panel were not necessarily representative of the Japanese population. Because the study was conducted in December 2022, a period during the coronavirus disease 2019 (COVID-19) pandemic, the results may reflect the situation at that time and potentially be subject to rapid change.ConclusionsAmong the policy options evaluated in this study, the most preferred option was easily accessible therapeutic drugs and their monetary value was substantial. Wider accessibility of tests, vaccines, and drugs was preferred over behavior and entry restrictions. We believe that the results provide information for policymaking to prepare for future infectious disease epidemics and for assessing the response to COVID-19 in Japan.

Carrots and sticks in trade and climate policies

ABSTRACT Tariffs or consumption tax hikes used in isolation engender consumption-based emission spillovers. A combination of these two instruments, if well designed, can offset these spillovers and would result in a zero-sum or win-win welfare outcome. The approach suggested here either strengthens deterrence against free-riders via stricter tariff sanctions or promotes climate cooperation via trade liberalization. The choice of trade and climate policy instruments depends, inter alia, on the relative strength of Home versus Foreign price responsiveness of demand.

THE REALITY AND ANALYSIS OF TAX FINANCING FOR THE GENERAL BUDGET IN IRAQ FOR THE PERIOD (2004-2021)

Taxes are considered one of the most important sources of public revenues in financing the general budget in Iraq, because through them, financial revenues can be provided to finance public expenditures because they are stable compared to other revenues such as oil revenues. The financial policy in the country through which it can solve economic problems such as inflation and solve social problems through the redistribution of income among members of society. The research reached a set of conclusions and recommendations.
 Economic and social objectives, the presence of cases of double taxation in some tax laws and legislations that lead to tax evasion, the low importance of the percentage of tax revenues in public revenues in Iraq during the study period (2004-2021), as the average contribution percentages reached (3.469%) from a group public revenue. As for the recommendations, the most important of them is that we must diversify the sources of public revenues in Iraq and pay attention to tax revenues and increase interest in the industrial, agricultural and commercial sectors because they lead to an increase in the size of the tax base, relying on a consistent and unified tax system for taxes that helps to implement tax laws and legislation effectively.

Consumption and voluntary savings response to service tax

PurposeThe purpose of this study is to find out the effect of consumption tax on savings behavior especially on the people who are close to their retirement.Design/methodology/approachThe authors analyze the response in spending and retirement saving using a difference-in-differences regression methodology. The authors use the year since the Public Provident Fund (PPF) enrollment date for each individual as a random assignment to identify the service tax policy's causal impact. Therefore, this variable is a continuous variable defined as an individual's age until the end of the restrictions when people can withdraw money from their retirement savings account PPF without any penalty. The treatment variable is the service tax shock (increase in service tax) that happened effective 1st April 2015.FindingsThe authors find a significant effect of a change in the service tax rate on individuals' spending and PPF saving behavior. On average, individuals lower their consumption by about 14% and increase their PPF savings by 16% in response to the increase in the service tax rate. The authors find substantial heterogeneity in effect across different types of individuals. The effect is more pronounced for people closer to their retirement and needy people (defined as individuals with low traditional savings account balances).Research limitations/implicationsThe authors studied the effect of consumption tax on one category of savings (PPF) only. There are other savings instruments available in India. The data for those were not available to us.Practical implicationsThis paper not only throws light on the consumption and savings behaviour of the individuals, but will also help the policy maker for framing appropriate fiscal policy.Originality/valueUsing a unique and proprietary data from a large bank in India, the authors analyze the effect of a tax policy change on households' consumption and retirement savings behavior. The authors find that households reduce their consumption by 14% and increase their voluntary retirement savings (Public Provident Fund aka PPF) by 16% in response to an increase in the service tax policy. Individuals close to their retirement age (55 years of age and above) and without any withdrawal restrictions from their PPF account tend to reduce their expenditures more and save more. Individuals with financial constraints and withdrawal restrictions do not reduce their expenditures significantly. To the best of the authors’ knowledge no study was done on this.