Tax Reform Research Articles

Corporate inversion, cost of equity and ineffective tax reform

AbstractUS multinational firms typically invert either through a pure form or by merging with foreign entities. Our research documents that pure inversions increase inverting firms' cost of equity, while merger inversions decrease it. These results remain robust across different measures of the cost of equity. We also demonstrate that the 2004 tax reform is ineffective in reducing US multinational firms' tendency to invert. Instead, it prompts firms to shift from pure inversions to merger inversions, which are less value‐enhancing due to their lower tax benefits. It is unlikely that the legislators had foreseen these outcomes.

Tax Reforms and Tax Burden of Listed Consumer Goods Firms in Nigeria

The lack of clarity in tax laws, coupled with frequent amendments and revisions, has given rise to uncertainty, hindering strategic planning and impeding long-term investment decisions. As a consequence, the publicly traded consumer goods firms in Nigeria face the formidable task of not only understanding and complying with the intricate tax structures but also striving to maintain competitiveness in an environment where the tax burden is increasingly becoming a pivotal determinant of business success. Given the foregoing this study examined tax reforms and tax burden: a study of listed consumer goods companies in Nigeria. In order to achieve the goals of the study, a longitudinal panel research design was implemented. The study concentrated on twelve consumer goods corporations that are publicly traded on the stock market. The selection of these companies was based on their continuous publication of annual audited financial statements from 2013 to 2022. The data obtained from these reports were analysed using the panel data regression approach, with the assistance of statistical tools like E-view 10. The study's findings indicated that direct tax exerts insignificant effect on tax burden of consumer goods firms in Nigeria. While indirect tax on the other hand, has a negative significant effect on tax burden of consumer goods firms in Nigeria. The study thus recommends that consumer goods firms should consider engaging with policymakers and tax authorities to advocate for favorable indirect tax policies. Collaborative efforts with government agencies can contribute to creating a tax environment that aligns with business needs and minimizes the negative impact on the tax burden.

Effect of Tax Reform on Revenue Collection Performance in Rwanda: A Case of Rwanda Revenue Authority Headquarters

Effect of Tax Reform on Revenue Collection Performance in Rwanda: A Case of Rwanda Revenue Authority Headquarters

Advocacy coalitions or pragmatic coupling of streams? Explaining policy change in Mexico: The tax reforms of Vicente Fox and Enrique Peña (2001 and 2013)

AbstractWhen the former hegemonic PRI won the 2012 election after 12 years of rule by PAN, the President shared with his predecessors a similar institutional setting and divided government. And yet, the PRI managed to pass all items of an extensive 2013 tax reform. If the setting was the same, why did PRI succeed when PAN had only limited success? Why was the 2013 tax reform progressive if PAN and PRI were ideologically proximate? Current explanations that characterize PAN's 2001 tax reforms as a failure because of an unsuccessful change to the Value‐Added Tax Law can accommodate neither the puzzling 2013 extensive tax overhaul nor the changes to the Income Tax Law that were indeed approved in 2001. To navigate these puzzles, I contrast the elements of both proposals and rely on two public policy theoretical frameworks literature, the Advocacy Coalitions and Multiple Streams frameworks to find that, despite representing political compromise over a shared agenda, the outcomes in 2001 and 2013 had less to do with commitment to a core of mutual beliefs and more with policy entrepreneurs of PRI and PRD taking a gamble on a window of opportunity.

Tax reforms and network effects

This paper investigates the effects of a tax reform that eliminates tax rate heterogeneity and cumulative taxation using a general equilibrium model with multiple sectors with market power. Industries are connected through input-output linkages, and changes in taxation are not confined within industries. We calibrate the model to Brazil, a country with a highly distorted tax system. The revenue-neutral tax reform generates gains of 7.9% of GDP and 1.8% of welfare. Just eliminating VAT rate dispersion leads to a 6.0% increase in GDP. Due to propagation effects, in 10 sectors direct taxes increased but output and profits did not fall.

The project of state transforma- tions by M.M. Speransky

The relevance of the research lies in the analysis of the transformation project of one of the outstanding reformers of the days of Alexander I, whose ideas were not duly appreciated, but could prevent serious upheavals in Russia during subsequent reigns. The problem is that changes proposed by Speransky’s would have laid the foundation for a deep reform of the country, however, not all projects were destined to be realized. The purpose of the research is to consider the transformation projects of Speransky M.M. and to analyze the degree of their implementation. The article used the retrospective and historical-genetic methods of historical research. The first allowed us to immerse ourselves in the events of the past, the second allowed us to analyze the degree of implementation of projects. The result of the research: many of Mikhail Mikhailovich’s proposals would subsequently be considered by the descendants of the winner of Napoleon Bonaparte, but then the Russian emperor considered the projects premature. Only the reform of religious educational institutions was one of the few that was implemented almost completely. The conclusion: Speransky’s proposals in the field of religious education were implemented more than all others examined in the research; among state reforms, only the State Council arose; as for tax reforms, only certain partial proposals of the reformer were implemented.

Fiscal Policy for Inclusive Growth. A Case Study of Myanmar

Following decades of isolation under military rule, Myanmar initiated historic political reforms since 2011, but faces challenges translating liberalization into broad-based advancement. A dynamic stochastic general equilibrium modelling approach estimated on Myanmar data is used, with simulations quantifying potential growth and distributional impacts of strategic government expenditure reallocations towards infrastructure upgrading, agricultural investments, expanded social transfers and progressive tax reforms. Results indicate sustained infrastructure and rural productivity spending have high output multipliers while well-targeted transfers reduce income inequality. However, institutional absorptive capacities condition realization of social returns. Complementary governance enhancements like project oversight and competitiveness in public investment allocation prove vital. Regional peer benchmarking provides comparative lessons. Altogether, evidence-based fiscal reorientation towards addressing pressing human capital, rural-urban and firm competitiveness constraints can accelerate inclusive growth in Myanmar if pursued prudently. Sustainable expansion requires strengthening public financial management (PFM) systems and results monitoring.

Beyond ultra-processed foods: the new direction of the basic food basket in Brazil

Decree 11.936/2024 initiates a significant transformation in the Brazilian basic food basket, focusing on encouraging healthier and more sustainable eating habits. By prioritizing whole foods and restricting ultra-processed foods, it aligns with nutritional policy guidelines and tax reform, demonstrating a commitment to public health and food sustainability. The document reconciles with the recommendations set forth by the Dietary Guidelines for the Brazilian Population, which emphasizes seasonality, family farming, local and regional traditions, biodiversity, and environmental respect essential elements for food and nutritional security that offer direct benefits to public health. Through this approach, it seeks to guide the population towards balanced eating practices, ensuring access to nutritionally adequate and sustainable food, especially for the most vulnerable segments of society.

Direct Tax Reforms of India: History and Evolution

In the Indian context, this study looks at a number of aspects of revenue mobilisation, taxpayer behaviour, and tax administration. The study finds important patterns and connections in the dynamics of tax collecting by applying quantitative analytical techniques such a regression analysis, ratio analysis, CAGR (compound annual growth rate) analysis, and correlation analysis. The results of regression analysis highlight the impact of the economy on tax collection, showing a robust positive connection between GDP and direct tax revenue. Throughout a 22-year period, ratio analysis shows rising efficiency patterns in tax collecting processes, while CAGR analysis shows a steady increase in the taxpayer base, especially among small- and medium-sized firms and individual taxpayers. Moreover, an examination of the Tax Effort Ratio suggests that direct taxes are making a larger contribution to overall tax revenue, which is indicative of changes in the composition of income. Positive correlations between various direct tax types and overall tax revenue are revealed by correlation analysis, highlighting the interdependence of tax collecting dynamics. The study admits its limitations, which could affect the finding’s generalisation and interpret. These limitations include data limits, methodological difficulties, and contextual issues. However, the knowledge gained has significant implications for additional study areas, decision-making by managers, and policy formation with regards to improving the efficiency of tax administration, encouraging compliance with taxes, and supporting sustainable financial governance in India. In order to tackle these issues and develop proven methods for enhancing the results of tax administration and fostering equitable economic growth, interdisciplinary cooperation, involvement of stakeholders, and continuous surveillance and evaluation are advised. Keywords: Tax, Regression, CAGR, Tax Effort Ratio, Correlation, Ratio, Revenue, Income.

Has environmental protection tax reform promoted green transformation of enterprises? Evidence from China.

Facing the increasingly stringent constraints of resources and the environment, the green transformation of enterprises is imperative. This study selects A-share listed companies in Shanghai and Shenzhen from 2014 to 2021 as samples, using the difference-in-differences method to examine the impact of the environmental protection tax reform (EPTR) on the green transformation of enterprises. The results indicate that the EPTR can promote the green transformation of enterprises, achieving this through three channels: raising the cost of pollution, strengthening the rigidity of law enforcement, and breaking the collusion between the government and enterprises. Notably, this promotional effect is more significant in non-state-owned enterprises, companies in the eastern and western regions, firms with low financing constraints, and those with high media attention. Further analysis shows that the EPTR has a positive impact on the green total factor productivity (GTFP) of enterprises, which implies that enterprises are not only proactively pushing for a green transformation at the strategic level but also taking practical actions. This study responds to the problem of the greening of tax system to promote the green development of enterprises from two aspects of enterprise strategic implementation and productivity and explores the impact mechanism from the perspective of institutional logic. It enriches the research on the effectiveness of the EPTR at the micro-level and broadens the research perspective on the impact mechanisms of environmental regulation. The findings of this study provide references for further optimising relevant policies and regulations and also offer insights for other countries and regions seeking sustainable development.

Trade liberalization and the choice of pollution abatement

AbstractIt is well known that a consumer price-neutral reform of consumption taxes and import tariffs is welfare-improving. This paper shows that such price controls are inferior to quantity controls in terms of welfare improvement. The paper next turns to a comparison of different abatement strategies. Whether or not policy changes should fix private abatement or public abatement relates to the level of earmarking, and depends on the relationship between private production and public abatement. There are cases in which increased public abatement only improves welfare by more than both increased private and public abatement together. The paper recommends that environmental earmarking in the form of public abatement should be delivered to cushion price hikes and sustain private energy consumption.

Fiscal Year-Ends and Financial Benefits: The Role of Prospective Measurement Dates in Tax Reform

ABSTRACT The Tax Cuts and Jobs Act (TCJA) of 2017 dramatically reshaped the tax landscape for companies and reduced incentives for multinationals to leave foreign earnings abroad. We study a provision of the law that allowed some multinationals to take simple measures to reduce their tax burden more than other firms. The TCJA levied a tax on accumulated income held in foreign subsidiaries of U.S. firms. The implementation of this tax left firms an avenue to protect shareholder wealth, as foreign income retained as “cash” was taxed at a higher rate (15.5 percent) than foreign income retained in other asset classes (8 percent). Measurement rules allowed some firms significantly more time to shift foreign cash holdings to “noncash” assets and lower their tax burden. Using staggered, firm-specific measurement dates, we find that fiscal year-end firms with more time to respond to the law reduced their cash levels more than other firms. JEL Classifications: E62; H21; H25.

ЕНДОГЕННІ ПЕРЕШКОДИ РИНКОВОЇ ЕКОНОМІКИ ТА МОНЕТАРНО-ФІСКАЛЬНІ ЗАХОДИ ЇХ ПОДОЛАННЯ

The author's vision of endogenous obstacles to the development of the modern market economy and the ways to overcome them in the direction of macroeconomic policy on the labor-value basis of classical political economy are revealed. Three obstacles to economic growth in the course of its selfflowing (without state intervention) processes have been identified, namely: a) violation of valuemoney parity – loss of value adequacy of money; b) the lagging of solvent demand from the volume of product supply, which with a certain cyclicality blocks the reproductive process of production; c)"overproduction" of fictitious capital, which bleeds the real sector of the economy. Regarding the support of value-monetary parity in the economy, the expediency of applying the "monetary rule" of monetarism has been confirmed: the emission of the money supply to the beat with the increase in real GDP. Cyclical crises of commodity overproduction are caused by the lagging of solvent demand from supply by the amount of capital accumulation, and therefore have no rational options for overcoming them, except for damping sharp changes in cyclicality. The main novelty of the author's proposals is directed against the parasitic essence of the "financial economy", which sprouts in the course of the "overproduction" of fictitious capital. Since the root cause of such a harmful phenomenon is the overprofitability of the financial sector of the economy as a result of the value-speculative revaluation of inflated assets, the essence of the author's innovation comes down to a radical reform of the tax system in order to prevent their speculative revaluation: the transition from income taxation to taxation of the market capitalization (market valuation) of large businesses based on stock price. According to the author's assumption, the tax on the market value of assets should lead to the depreciation of the inflated capitalization of financial pyramids and bubbles, that will direct investments flows to the commodity-producing sector of the economy, exempted from taxation of business profits. As a result the tax reform will deconserve the production capacities of the real economy, will lead to the industrial revival of the countries of the world democracy in the face of authoritarian revenge. Especially if these countries are consolidated on the basis of a coordinated monetary and fiscal policy: a single currency and a unified tax system. Opposing the axis of autocratic evil requires it.

The Pivotal Role of Capital Gains in Efficient and Progressive Tax Reform

Increased, targeted taxation of capital gains is key to making the personal income tax more progressive, and it can also contribute to a more efficient system. This article assesses a two-tier capital gains tax that would apply a second, higher inclusion rate for gains above a specified threshold. Relative to a general increase in the inclusion rate—widely promoted by tax analysts—a two-tier scheme would focus on high-income, high-wealth taxpayers, forgo limited revenue, and be more publicly acceptable and politically viable. Relative to reforms to the alternative minimum tax (AMT), the two-tier scheme would be simpler, cover more taxpayers, capture more revenue, and conform more closely to the notion that "the rich pay their fair share." The article explains how capital gains are an amalgam of capital and labour inputs, often containing supernormal returns that are an efficient target for increased taxation. The article further details the high concentration of recurrent large capital gains at top income levels and critically assesses arguments commonly made against raising the gains inclusion rate. It also identifies desirable companion measures for a two-tier gains tax—including restoration of income averaging and abolition of the federal 33 percent top tax bracket and the AMT itself. In short, the current 50 percent capital gains deduction serves as a gateway for endless tax-minimizing and economy-distorting stratagems. Closing that gate even partway for those most prone to enter into such planning would be pivotal in making Canada's tax system both more efficient and more progressive.

Contribution of Tax Reform on Reduction of Tax Evasion in Rwanda

The study aimed to explore the contribution of tax reform on reduction of tax evasion in Rwanda, guided by objectives to examine contribution of personal income tax reform, identify contribution of corporate income tax reform and assess contribution of value added tax reform. The research design was qualitative, targeting 2700 taxpayers were from Rubengera sector. The systematic sampling method are taxpayer, resulting in a sample size of 348 respondents drawn using purposive sampling. Close ended/structured questionnaires were used to primary data, which was then analyzed using the Statistical Package for Social Science (SPSS). The data was analyzed the findings of using both descriptive and inferential statistics show a strong and positive association between tax reform and tax evasion at personal income tax reform (PIT) will help with reduction of tax evasion with the mean score is notably higher at 2.74, indicating a more positive perception of the reform's effectiveness. Still, the wider standard deviation of 1.404 suggests greater variability, corporate income tax reform (CIT) combined with value added tax(VAT) will help with reduction of tax evasion with no significant correlation between VAT reforms and corporate income tax reforms or their effectiveness and the corporate income tax reform (CIT) respondents gave an average score of 2.73 on the effectiveness of these reforms in reducing tax evasion, with a standard deviation of 1.422, indicating variability in opinions. The results show that the study stated that tax reforms reduced tax evasion significantly and made the following recommendations: The Rwanda Revenue Authority (RRA) should offer comprehensive training to all taxpayers, focusing particularly on educating them about the substantial changes resulting from the tax reforms, especially the new requirements and their perceptions of the impact and effectiveness of these reforms in curbing tax evasion. The consistent nature of these results emphasizes the importance of considering a variety of viewpoints when assessing the outcomes of tax reform efforts. To ensure the continuous effectiveness of Rwanda's tax system, it's imperative to regularly review and adjust it in accordance with the current economic landscape. The study's findings underscore the substantial impact of tax reforms on reducing tax evasion. The research concludes by suggesting further investigations to evaluate the influence of tax reform on tax revenue contribution in Rwanda.

Международный опыт подоходного налогообложения физических лиц и направления совершенствования налоговой системы Российской Федерации

The article examines the international experience of personal income taxation in developed countries such as the United States of America (USA), the United Kingdom, Japan, China, Australia, Canada, and Germany. The study was conducted using general scientific methods of cognition, including observation, comparison, data collection and analysis, deduction, and induction. The sources of information for the study were regulatory and legislative acts, as well as electronic resources. The main findings include reform of the personal income tax (PIT), aimed at increasing revenues, but not too heavy a tax burden for taxpayers and ensuring fairness, is a matter of concern at present. The study of tax systems in other countries allows us to identify effective approaches to the development and implementation of tax reforms, as well as to avoid mistakes made in other states.

Effectiveness evaluation of China's water resource tax reform pilot and path optimization from the perspective of policy field.

The water resource tax reform played an important role in promoting sustainable development in China. Subsequent to the seven-year reform, the effectiveness evaluation of the policy in each pilot area and the exploration of the optimization path directly affected the promotion of water resource tax policy and the improvement of water use efficiency. Therefore, the theoretical framework of the water resource tax policy field was constructed to examine the mechanism of the three subsystems of policy scenario, policy orientation, and policy effect; fuzzy-set qualitative comparative analysis (fsQCA) was then used to evaluate and quantitatively compare the policy implementation effect and policy path in each pilot area, with emphasis put on three policy orientations, i.e., the decision and decomposition effect of policy goals, the selection and im plementation effect of policy tools, and the policy supervision and security effect. As shown by the research results: ① the water resource tax reform had effectively improved the efficiency of water resource utilization in the pilot areas; ② three pilot models of water resource tax policy had been extracted, namely the policy goal and tool-driven model centering on a single dimension of the policy field, the implementation-supervision dual drive model emphasizing the supervision and security effect of the policy, and the three-dimensional policy orientation linkage model that focused on the synergistic effect of the policy field; ③ strong heterogeneity existed in water resource tax policy implementation paths and effects in each pilot area. Accordingly, regional heterogeneity could be considered in the process of reform to construct institutionalized, precise, and differentiated reform implementation methods from the perspective of the policy field.

Can the water resources tax promote the water-saving innovation performance of high water consumption companies? -Empirical analysis from the pilot provinces in China

Water resource shortages and groundwater overexploitation in China restrict high-quality economic development and cause serious environmental issues. To promote the intensive use of water resources, suppress groundwater overexploitation and force high water consumption companies to save water, the Chinese government implemented “interim measures for expanding the reform of the water resources tax” in 2017. We represent water-saving innovation performance as the number of authorized green patents promoted by the water resources tax. By selecting the annual reports and patent data of 818 high water consumption listed companies and 727 nonhigh water consumption listed companies in pilot and nonpilot provinces, we use double difference and triple difference methods to verify the influence of the water resources tax policy on promoting the water-saving innovation performance of high water consumption companies in pilot provinces. Then, the parallel trend test, PSM-DDD robustness test and placebo test are used to demonstrate the rigor and effectiveness of this study, where all possible factors that interfere with the results of the study are excluded. In addition, the heterogeneity analysis shows that the water resource tax policy is more significant for promoting the water-saving innovation performance of nonstate-owned and small and medium-sized companies than it is for promoting that of state-owned and large-scale companies.

Post-conflict economic recovery and land policy in South Korea between 1948 and the early 1960 s

A multiplicity of issues impact upon post-conflict economic recovery, one of which is land policy. Depending on the policy adopted, it could promote post-conflict economic growth, but it could also hinder the economy. This study reviews post-conflict economics and land conceptually and analyses the effect of land policy on post-conflict economic recovery in South Korea. Conceptually, post-conflict economy and land are interrelated in terms of security of land tenure, the land market, land (taxation) reform and revenue. Land tenure is secured through land reform in post-conflict situations. Security of land tenure stabilises and revitalises the land market, which leads to an increase in land tax. In addition, land taxation reform provokes an increase in land tax, and land tenure needs to be secured to maximise land tax collection through land taxation reform. The revenue collected through revitalisation of the land market and land taxation reform is utilised to stimulate post-conflict economic recovery. However, the South Korean case is not completely in line with the conceptual relationship. First, land taxation reform in South Korea resulted in an increase in public revenue, and the government was able to spend this revenue in supporting the war and partially stimulating post-conflict economic recovery. On the other hand, land tax reform could promote post-conflict economic recovery at the national level, while at the same time causing poverty at the individual level. Second, the South Korean case suggests that the foundation for the land market was laid during the post-conflict period and an increase in revenue through the revitalisation of the land market mainly contributed to economic development after the post-conflict period. In South Korea, land taxation reform had been more important than the land market for post-conflict economic recovery.

Structural tax reform and local government non-tax revenues – evidence from rural tax reform of China

ABSTRACT Taking rural tax reform as an exogenous shock and exploiting county data from 2001 to 2007, this research investigates the impact of structural tax reform on local governments’ non-tax revenues with a difference-in-difference method. The result shows that structural tax reform has a significant positive impact on local governments’ non-tax revenue. This impact can primarily be attributed to changes in the tax–sharing ratio and the adoption of setting revenue by expenditure. Heterogeneity analysis reveals that the policy effects of rural tax reform vary in the transfer payment from the central government, the scale of local governments, and the degree of regional legalization. Further study demonstrates that, as measured by per capita fiscal revenue, the local fiscal burden grows rather than reduces due to rural tax reform, reiterating the presence of ‘Huang Zongxi’s Law’ in industrialized societies. Finally, we provide policy recommendations for enhancing regional legalization, strengthening official promotion channels, transforming government functions, and optimizing government macro-control functions.