Tax Levels Research Articles

Factors Contributing to Tax Compliance among Small and Medium Sized Enterprises: A Case of Selected SMEs in Iringa Municipality

The purpose of the study was to determine factors contributing to tax compliances among small and medium sized enterprises (SMEs) in Tanzania, with reference to selected SMEs in Iringa Municipality. The study objectives were; to evaluate the contribution of taxpayer’s education, to determine the contribution of tax rate and to assess the contribution of tax penalties on tax compliance among SMEs in Iringa Municipality. The targeted population were 172 SMEs where a sample size of 63 SMEs was drawn using descriptive research design. The study used stratified sampling technique and data were analysed using linear regression through ordinary least squares estimator showing relationship between tax compliance among SMEs as dependent variable to taxpayer education, tax rate and tax penalties as independent variables. Taxpayer education and tax penalties had a positive relationship and tax rate showed the negative relationship with tax compliance among SMEs. The results from the regression and t- test showed that taxpayer education, tax rate and tax penalties have a significant impact on tax compliance since the p-values were less than 0.05. In the case of the normal regression output the adjusted R2 equals 0.534 implying that the model explains about 53.4% variations in tax compliance among SMEs. The study concludes that tax payers’ education has positive effects on tax compliance while high tax rates discourage the SMEs on tax compliance. Nonetheless, high tax penalties positively influence tax compliance.. The study recommends fair and at moderate level tax levels and there should be more emphasis on tax payers’ education and awareness to increase tax compliance

Measures to reduce sugar, fat, and salt content of food and beverages in selected European countries

Abstract Introduction Improving food environments to promote healthy diets is a core element of many nutrition and health policies. Government-driven attempts at achieving such improvements comprise mandatory and voluntary measures to reduce the content of sugar, fat, and salt in food and beverages. Here we provide an overview of the different measures taken in selected European countries. Methods A systematic internet search for ongoing or planned national reduction measures in each of the three categories of taxation, legal limits/bans, and self-commitments was conducted for 19 European countries. Core characteristics of each measure, including evaluations thereof, were extracted and summarized. Results The measures varied in, e.g., the nutrients, product groups, and sectors addressed (manufacturing, retail, out-of-home), the timeframe, and the target values. Taxation (15 countries) mainly concerned sweetened beverages, with tax levels mostly depending on the sugar content. Independent evaluations concluded that the tax introduction had led to the sugar content being reduced as well as consumer demand shifted towards lower-sugar options. Six countries had legal limits for the salt content in bread (limits between 1.3 g and 2 g/100 g bread), and nine countries set legal limits for sugar, fat, and salt in food or meals or vending bans for products high in these nutrients in food service for the public sector. The limited evaluations of compliance with the upper limits were ambivalent. Voluntary commitments (12 countries) mainly concerned the reduction of salt and sugar. Independent studies and monitoring results on the achievement of the agreements showed mixed results. Conclusions National measures to reduce sugar, fat, and salt in food and drinks varied in content and depth, and thus in their likely ability to contribute to a healthier food environment. More comprehensive monitoring and evaluation is needed to better assess the effectiveness of the different approaches.

The Determinants of Tax Revenue: The Case of Turkey

Tax is the most basic public financing instrument of the treasury. Tax is an important instrument of fiscal policy as well as its role in financing public investment and public services. For these reasons, it is imperative for all countries must achieve a stable level of tax that allows public needs to be met. Economic and financial factors affecting the performance of tax revenue play an important role in the determination and implementation of tax policies. This study investigated the determinants of tax revenues in Turkey. For this purpose, the effect of USD/TL exchange rate, M2 money supply, industrial production index, deposit interest rate, unemployment rate and export variables, which are considered to be effective on the tax level, on the tax level in Turkey for the period 2006M1- 2022M11 within monthly observations, is analyzed by ARDL methods. The empirical findings reveal that there is a cointegration relationship between tax revenues and all series. According to the long-run coefficient estimates, M2 money supply, industrial production index and deposit interest rate affect the tax level positively, while unemployment rate and USD/TL exchange rate affect the tax level negatively.

Simulated effects of carbon pricing on industrial sector energy use

The aim of this paper is to analyze the simulated effects of carbon pricing on South Korea's industrial sector by using carbon pricing scenarios. The estimation results show that carbon taxation is highly effective to reduce carbon emissions of industrial sector only when the changes of energy mix take place. If the energy mix remain unchanged, the level of carbon tax should be higher than 60,000 Korean won (USD 54.55) to achieve the NDC goal of 14 % emissions reduction in industrial sector. In addition, the reduction in industrial production due to the carbon tax is estimated to be relatively small when substitution between energy and other production factors is possible. This paper proposes policies that can induce changes in the energy mix are very necessary in order to decarbonize and strengthen the competitiveness of industrial sector.

Impact of Carbon Capture (Storage) and Carbon Tax on Economic Dispatch of an Integrated Energy System

Finding the balance between economy and low emission of an integrated energy system (IES) has become one of the current research hotspots. This article introduces the carbon tax and carbon capture (storage) technology within the framework of the IES model. The IES comprises of components such as combined heat and power units equipped with carbon capture facilities, wind power generators, photovoltaic panels, and energy storage systems. The objective function of the model is the minimization of operational costs. Low-carbon economic operation dispatching problem under the constraints of energy conversion, energy balance, and operation cost is studied based on a mix-integer linear programming model. Through sensitivity analysis, this study explores the impact of varying carbon tax levels on the operational costs and emissions of an IES while considering peak and valley price differences. The emission reduction potential of the IES under different policy and technology scenarios is also estimated.

Digitalization and the environment: The role of information and communication technology and environmental taxes in European countries

AbstractThis study examines the impacts of digitalization through information and communication technology (ICT) and environmental taxes on greenhouse gas (GHG) emissions in 23 European Union (EU) countries between 2000 and 2017. Using the Pooled Mean Group estimator, the empirical results provide evidence that ICT development and environmental taxes improve environmental sustainability while research and development investments and income per capita deteriorate environmental sustainability. Furthermore, the results based on the Dynamic Panel Threshold Regression model show that the relationship between ICT and GHG emissions is dependent on the level of environmental taxes. During the period of low environmental taxes, the effect of ICT on GHG emissions is positive and insignificant but once environmental taxes cross the threshold value, the effect of ICT becomes negatively related to greenhouse gas emissions. This suggests that the period of low environmental taxes does not support the environmental friendliness of ICT development in the European region. The policy implication of these findings is that ICT, environmental taxes, and renewable energy can be possibly stirred up to achieve long‐term environmental sustainability in the EU region.

Targeted Measures Against Intra-Group Debt Financing: What Needs and Design Options in Light of the ATAD, Transfer Pricing Rules, and Pillar 2?

This article explores the need for interest limitation rules targeting intra-group debt financing, together with certain design options. It is concluded that most issues related to intra-group debt financing are already covered by the anti-tax avoidance directive (ATAD), transfer pricing rules and the Pillar 2 reform. Only the debt/equity balance is not addressed by these rules. Therefore, thin capitalization rules appear to be the most motivated type of targeted rule, if such rules are to be adopted. Other types of targeted rules, such as those taking into account the level of taxation of the recipient or the intention to avoid tax are hardly justified in cases covered by the Pillar 2 reform. In addition, thin capitalization rules can be designed in a manner that does not distinguish between domestic and cross-border situations, hence raising fewer issues of compatibility with the EU fundamental freedoms than other types of targeted rules that rely on the difference in taxation between domestic and cross-border loan transactions. Interest limitation, thin capitalization, ATAD, transfer pricing, GloBE, Pillar 2, BEPS, EU law

Problems and a mechanism for improving the efficiency of property taxation of metallurgical plants

Subject. This article discusses the issues of improving the instruments of property taxation of the metallurgical sector of the Russian economy. Objectives. The article aims to analyze the problems of property taxation of the metallurgical sector of the Russian economy, the latest developments in this area, as well as mechanisms to improve the property taxation efficiency. Methods. For the study, I used the comprehensive and systems approaches, observation, and comparison. Results. The article describes the main problems in tax accrual faced by enterprises in metallurgy, as well as ways to solve them and regulatory tools, as part of the economic policy of the State and regional authorities aimed at stimulating the development of enterprises in the industry. It also proposes mechanisms to improve the efficiency of metallurgical plant property taxation. Conclusions. The system of taxation of property of enterprises in Russia is undergoing changes, a differentiated approach to enterprises is used, as indicated by different levels of taxes or their abolition. At the same time, there is a need for improvement to stimulate enterprises to develop and re-equip.

Impact of carbon footprint of bank loans and fossil fuel subsidies on ecological footprint in Tunisia: A contingency and asymmetric analysis

This study examines the impact of the carbon footprint of bank loans (CFBL) and fossil fuel subsidies (TFFS) on the ecological footprint of Tunisia using a linear and nonlinear ARDL framework. The study found that a 1% increase in CFBL is associated with a 0.15% increase in ecological footprint, whereas a 1% increase in TFFS is correlated with a 0.80% increase in ecological footprint. This suggests that fossil fuel subsidies have a larger detrimental impact on the ecological footprint compared to CFBL. The results provide evidence of an asymmetric relationship between CFBL, TFFS, and ecological footprints. Specifically, CFBL has a significant positive association with ecological footprint, with a 1% increase in CFBL associated with a 0.01% increase in ecological footprint, while a 1% decrease in CFBL results in a 0.002% increase in ecological footprint. TFFS has a more pronounced impact on ecological footprint, with a 1% increase associated with a 0.14% decrease and a 1% decrease associated with a 0.30% decrease, which is twice as large. The findings suggest that positive shocks in environmental taxation lead to a 0.54% decrease in ecological footprints, while negative shocks have a profoundly detrimental effect with a 1.33% increase in ecological footprints. Additionally, the interaction effect indicates that the effectiveness of CFBL and TFFS on ecological footprints is contingent on the level of environmental tax. The result shows that with a 1% increase in environmental tax, the negative impact of CFBL and TFFS on ecological footprints decreases by 0.02% and 0.09%, respectively. These findings underscore the importance of reducing carbon emissions and fossil fuel subsidies and implementing effective environmental taxation policies to promote sustainability and mitigate environmental damage.

Capital and labor taxes with costly state contingency

We analyze optimal capital and labor taxes in a model where (i) the government makes noncontingent announcements about future policies and (ii) state-contingent deviations from these announcements are costly. With Full Commitment, optimal announcements coincide with expected future taxes. Costly state contingency dampens the response of both current and future capital taxes to government spending shocks and labor taxes play a major role in accommodating fiscal shocks. These features allow our quantitative model to account for the volatility of taxes in US data. In the absence of Full Commitment, optimal announcements are instead strategically biased, because governments have an incentive to partially constrain their successors. The cost of deviating from past announcements generates an endogenous degree of fiscal commitment, determining the average level of capital taxes.

ПРАВОВІ АСПЕКТИ ВИКОРИСТАННЯ ЕКОЛОГІЧНОГО ПОДАТКУ ДЛЯ ВПЛИВУ НА ЕКОЛОГІЗАЦІЮ ГОСПОДАРСЬКОЇ ДІЯЛЬНОСТІ

The article is devoted to the research of the environmental tax as an indirect method of state influence on the activities of economic entities in order to achieve the environmental goals of sustainable development. It is proven that although the Economic Code of Ukraine does not directly provide for environmental policy as a component of state economic policy, the latter must be determined and conducted taking into account the environmental component. It is noted that the legal economic order includes the need for compliance with environmental norms by subjects of economic activity. One of the appropriate indirect methods of state influence for the implementation of sustainable development tasks is an environmental tax. It has two main functions – fiscal and nature protection. It is expedient to ensure a balance between these two functions, which can be achieved only within the framework of the proper economic policy of the state. In modern conditions in Ukraine, the fiscal function of the environmental tax prevails, because the money received from the collection of this tax is directed to other purposes. It is necessary to make changes to the Budget Code of Ukraine, which will establish the purpose of the funds received from the collection of this type of tax exclusively for ecological (nature protection) purposes. In the European Union, environmental or green taxes, which include taxes on energy, transport, pollution and resources, are one of the appropriate methods of influencing the behavior of economic entities to stimulate their fastest transition to a sustainable economy. Proper implementation of the nature protection function by the state within the framework of tax policy can have not only a stimulating nature, but also a restrictive and preventive one. This makes it possible to prevent or significantly reduce the negative impact of economic activity on the natural environment, and not to overcome the consequences of such negative impact. In the European Union, the carbon border adjustment mechanism СВАМ (Carbon Border Adjustment Mechanism) is being introduced, which makes it necessary for Ukraine to stimulate domestic economic entities to significantly reduce the level of CO2 emissions, because otherwise they may lose access to the markets of the European Union from 2025. The tax policy of Ukraine to increase environmental tax rates for environmental pollution is expedient. It is recognized as necessary to raise the level of environmental taxes to the level of rates of similar taxes in the member states of the European Union. One of the expedient economic methods of reducing the transaction costs of an economic entity for the introduction of “green” technologies and equipment is the use of accelerated depreciation of fixed assets for environmental protection purposes, which allows faster (compared to traditional depreciation methods) write-off of the cost of equipment used for environmental goals.

Uniform taxation of electricity: incentives for flexibility and cost redistribution among household categories

Recent European developments have shown a rapid adoption of residential solar PV with increased self-consumption and self-sufficiency levels. A major driver for their economic viability is the electricity tax exemption for the consumption of self-produced electricity. This leads to large residential PV capacities and potentially overburdened distribution grids. Moreover, the tax exemption favoring wealthier households capable of making capital-intensive investments in solar panels has prompted debates regarding energy equity and the suitable taxation level for self-consumption. This study investigates the implementation of uniform electricity taxes on all consumption, irrespective of the origin of the production, by means of a case study of 155,000 hypothetical Danish prosumers. The results show that the new taxation policy redistributes costs dependent on household consumption and their PV usage. As more consumption is taxed, the tax level can be reduced by 38%, leading to 61% of all households seeing net savings of up to 23% off their yearly tax bill. High-occupancy houses save an average of 116 €/year at the expense of single households living in large dwellings who pay 55 €/year more. Implementing a uniform electricity tax in combination with a reduced overall tax level can (a) maintain overall tax revenues and (b) increase the interaction of batteries with the grid while reducing behind-the-meter operations. In the end, the implicit cross-subsidy is removed by taxing self-consumption uniformly, leading to a cost redistribution supporting occupant-dense households and encouraging the grid-side flexibility of prosumers. This policy measure improves economic efficiency and greater use of technology with positive system-wide impacts while redistributing tax contributions by alleviating the regressive tax design.

Manufacturing sector of the economy of North-West Russia: A year of functioning under the conditions of strengthening sanctions

Aim. To study the peculiarities and problems of adaptation of the production sector of the economy of North-West Russia to the strengthening of sanctions pressure.Tasks. To assess the changes in the performance of enterprises of the production sector of the economy of the North-West of Russia in modern economic conditions; to identify the factors that hinder the development of production; to analyze the features of the transformation of supply chains and adaptation of enterprises to the strengthening of sanctions; to assess the financial condition and investment activity of enterprises; to characterize the degree of approval of the managers of enterprises of the implemented economic policy and show the expected directions of state policy.Methods. The methodological and informational basis of the study was provided by questionnaire surveys conducted by the Center for Structural Research and Forecasting of Territorial Development of the Vologda Scientific Center of the Russian Academy of Sciences (VolNTs RAS) in April-May 2022 and 2023.Results. According to official statistics, the deterioration of the economic situation in the North-West of Russia is confirmed by the results of surveys of managers of enterprises in the production sector of the economy. The main factors restraining the development of production are insufficient demand in the domestic market, uncertainty of the economic situation, high prices for production resources and the level of taxation. Due to the deep integration of the economy of the north-west of the country with the economies of unfriendly countries, the transformation of supply chains due to sanctions has affected the majority of enterprises in the region. The change in the configuration of chains is manifested primarily in their spatial reorientation and simplification of interaction directions. The enterprises of the Northwestern Federal District (NWFD) have a significant potential for the realization of the course on the complication of the national economy and strengthening the use of the potential of the domestic market. However, the transition to this trajectory is constrained by the lack of investment resources. The development of the production sector of the economy, according to managers of enterprises, will be promoted by reducing the tax burden, limiting production inflation, supporting domestic solvent demand, as well as strengthening the fight against bureaucracy and corruption.Conclusions. The complication of the geopolitical situation has significantly changed the conditions of functioning of the production sector of the economy of the North-West of Russia, led to the deterioration of the financial performance of enterprises, the decline in some performance indicators of their organizations. Active adaptation activities of enterprises (optimization of production processes, reorientation to new suppliers and consumers, transformation of interaction directions, etc.) with the assistance of the authorities contributed to a significant leveling of the negative consequences of the sanctions pressure and transition to a new development trajectory — to the complication of the national economy and increased use of the domestic market potential.

The Perception of Social Inequality Around the Globe. Editorial Introduction to the 2019 ISSP Social Inequality Module and Selected Country-Level Findings

The International Social Survey Programme (ISSP) recently released the 5th survey on the perception of social inequalities. The data was collected in more than 30 countries around the globe. This introduction offers an overview of the substantive contributions that are included in the two special issues on these data. It also presents results from an analysis of the recent ISSP data that shows how people perceive social inequalities, assess current levels of taxation and the performance of the government, experience inequality, and to what extent they trust other people. Despite evident variations across countries, the analysis highlights that respondents’ views continue to align with the conventional classification of countries into liberal welfare states, Scandinavian welfare states, continental welfare states, and post-communist countries.

Environmental taxation and profit-shifting activities

We analyse environmental taxation in an international setting, where a multinational company produces a good whose consumption causes a negative externality. We study the joint effects of imperfect competition, corporate tax and profit-shifting activities on the optimal level of environmental taxation. In a two-country framework, we show that in both countries the environmental tax that is set lower than the level allowing to fully internalise environmental costs. Profit shifting causes a further decrease in the low-business-tax country. Finally, we show that policies aimed at reducing profit shifting may have countervailing effects on environmental tax setting.

Trade and welfare effects of export tax: Theory and evidence from China's incomplete export VAT rebate

While China was reducing tariffs as part of the WTO accession process, it was also effectively restricting exports in some sectors by reducing the rebates of the value added tax (VAT) for exporters. We use a multi-country multi-sector Ricardian model to examine the extent to which these de facto export tax changes have benefited China and nullified the benefits to the rest of the world of China's trade liberalization. We show that trade liberalization benefited China's trading partners both through an improvement in their terms of trade and through a reallocation of resources from protected imported sectors to exportable sectors. We find that the partial rebate policy of VAT on exports provided a small effect overall on the welfare of China and its trading partners, although some countries lost as much as 2/3 of their gains from China's trade liberalization based on tariffs alone. By solving for China's optimal export taxes, we demonstrate that while certain sectors experienced a movement towards the optimal level of export taxes, others deviated from it. This differential adjustment contributed to the limited welfare effect on China. Interestingly, our results indicate that the export tax policies favored downstream sectors within China.

Tax policy and economic growth: Evidence from Ghana

The government of Ghana implemented an Economic Recovery Program (ERP) in 1983, aimed at the restoration of fiscal discipline towards increasing revenue and promoting economic growth. In spite of the fiscal reforms’ growth in tax, revenue continues to lag behind that of government expenditure and compares poorly with revenue performance in other parts of the world. Economic growth in the country also settled around 5 per cent level for two decades after the introduction of the fiscal reforms. This paper examined the effect of tax policy measures on economic growth and explored the tax revenue threshold that optimizes economic growth using time series data for the period 1970 - 2020. The data sets involve GDP per capita, stock of human capital, physical capital, growth rate of working population, and six (6) tax indicators namely: import duty, excise tax, company tax, personal income tax, income and property tax, and value added tax. The results of the unit root test reveal that all the variables are stationary at levels and first difference. The bounds test signals the existence of long run relationship among the variables at 1 per cent level of significance. Employing the Autoregressive Distributed- Lag technique, the findings suggested that economic growth benefits from increases in import taxes and company taxes more than the other types of taxes both in the short and long run. However, increases in the share of value added taxes and personal income taxes were found to have deleterious effect on economic growth in Ghana. A threshold level of 14.48 per cent of tax revenue - GDP ratio was found to be optimal level of taxes that impact economic growth. The study recommends that broadening, nurturing and sustaining tax base should be the utmost target of policy to ensure significant increase in the total government revenue to promote economic growth.

New Precarious Government Publishes Its Tax Plans

The controversial new government took over in spring 2023. So far, the tax plans of the new government are rather modest and focus on maintaining the current tax system and level of taxation. The parliamentary term usually lasts for four years but there are serious doubts concerning whether the government will last the full term. This note analyses the tax plans as published by the government after being appointed.

Joint well-placement and well-control optimization for energy-efficient water flooding of oil fields

Hydrocarbon production driven by water flooding is energy-intensive. This paper presents well-placement and joint well-placement-and-control optimization studies with objective function taking into account CO2 emissions, pursuing more energy-efficient water flooding. To assess the effect of emission cost on the optimal drainage strategy, multiple optimization problems implementing different CO2 tax levels are solved. The solutions for higher tax levels usually inject less water and proportionally emit less CO2. The trade-off between emissions and oil production is non-linear: For lower tax levels, we obtain solutions providing large emission reductions with limited reductions in production. Increasing the CO2 tax further, any additional emission reduction leads to a larger reduction in oil production due to reduced opportunities for energy efficiency. Enforcement of higher tax levels usually produces optimal drainage strategies with higher injection effectiveness and lower emission intensity. However, some increases in CO2 tax, particularly above the critical level, have negligible impact on the optimal solution, hence they only affect the profitability negatively without further reducing emissions or improving emission intensity. Compared to the well-placement solutions, the solutions for our joint optimization emit less CO2 and provide higher profit. They also have lower emission intensity due to lower injection pressure. The adjustable well-control enables our joint optimization to stop field production after some years which could be more profitable than continuing the production at high CO2 tax. These clearly demonstrate the advantages of incorporating the well-control variables, giving more freedom to our joint optimization. In well-placement optimization, reductions in water injection and emissions are obtained by decreasing well productivity and injectivity and by increasing inter-well distance. In joint optimization, water injection can also be reduced by adjusting the well-control, hence there is no clear trend in well productivity and inter-well distance with changes in injection volume. The trends in well characteristics concluded from the well-placement solutions could mislead the search for more energy-efficient drainage as they are different from the trends observed in the joint optimization solutions, indicating the importance of joint optimization in this study.

Nebraska Approves Pass-Through Entity Tax Bill

In 2023, the Nebraska Legislature passed a bill that allows a partnership or S-Corp to elect to pay its state income taxes. Previously, because the income from the partnership or S-Corp is passed through to the owner, the owners of the entity paid the taxes at their own individual tax level. In 2018, the federal government passed the Tax Cuts and Jobs Act (TCJA), which limited the itemized deduction for state and local taxes in the individual’s return to $10,000. This prompted many states to adopt laws like the new Nebraska law to work around this limitation. Federal tax law allows entities to deduct state income taxes paid as an ordinary business expense, but for most states this has only been allowed for C-corporations since they are the only entity to pay their own taxes. The pass-through entity tax law expands that option.