Uniform Tax Research Articles

A New Round of Fiscal and Tax Reform: A Discussion on Implementing Uniform Taxation on Labor Income

A New Round of Fiscal and Tax Reform: A Discussion on Implementing Uniform Taxation on Labor Income

Can the policy of income taxes merger reduce air pollution emission of enterprises? Evidence from China

This study examines how a uniform income tax rate affects Chinese domestic and international firms in 2008. Specifically, it investigates how this tax policy affects these enterprises’ air pollution emissions through a difference-in-differences (DID) model. Data suggest that implementing the Policy of Income Taxes Merger can effectively decrease the pollutant emission intensity of enterprises. This program aims to provide tax benefits to Chinese domestic firms while addressing pollution emissions by alleviating financial limitations and enhancing production efficiency.

Corporate Tax Rates, Allocative Efficiency, and Aggregate Productivity

Abstract This paper quantifies the impact of effective corporate tax rates on aggregate total factor productivity (TFP). Using Chilean manufacturing data, we document a large dispersion in the effective tax rate faced by firms and a mass of firms facing a 0 percent tax rate. We integrate these findings into a standard monopolistic competition model, where firms are subject to corporate taxation and also face output and capital wedges, which represent all other distortions present in the economy. We find that eliminating corporate tax rates increases TFP between 4 and 11 percent. We consider counterfactual policies in which firms face a uniform flat tax rate and find a monotonically decreasing relationship between the level of the tax rate and TFP.

Uniform agricultural tax abolition and differential household labor supply: Evidence from China's urban household survey

Uniform government public policy has steadily shaped the labor supply from households in the past few decades in China with possible differential impact on each parent. This paper investigates how uniform tax policy change plays differential roles in household's labor supply through government public education spending. Utilizing the exogenous shock from China's agricultural tax abolition in 2005, we find that the abolition results in a reduction in female employment but an increase in male employment. Specifically, a 1% increase of agricultural tax to public revenue ratio in the reference year leads to a 0.485% labor supply reduction and 1.50 fewer hours of work per month for married women, whereas the married men's labor supply increases by 0.191% and their working hours by 1.06 h in a typical urban family with school-going children. The effects are greater on married women with primary school-age children and married men from high-asset households. Our mechanism analysis indicates that public education spending works as a substitute for private education spending and affects the household labor supply through investment in children's human capital. Our findings offer a new perspective on the decreasing female labor supply and the widening employment gap between (married) women and (married) men in the Chinese labor market. The findings suggest that public tax policy could lead to unintended consequences on household's labor supply decisions, and thus exacerbate the gender employment gap in the labor market.

Environmental taxation of plastic bags and substitutes: Balancing marine pollution and climate change

Several countries have imposed either a ban or a tax on single-use plastic packaging, motivated by their contribution to marine plastic pollution. This may lead consumers to opt for similar unregulated substitutes, potentially undermining or even counteracting the intended effect of the policy instrument. The purpose of this study is to theoretically and empirically compare the environmental and welfare effects of the first-best Pigouvian taxes on both plastic bags and a substitute (paper bags), with two alternative second-best policy instruments: a tax on plastic products alone, and a common uniform tax on all packaging materials. The empirical analysis accounts for two different types of environmental externalities from the use of both bag types: marine pollution and greenhouse gas emissions. It also compares results for two countries, Denmark and the USA, which differ in the demand for plastic and paper bags. The theoretical analysis shows that a unilateral tax on plastic bags should equal the marginal environmental damage of plastic bags minus a fraction of the marginal environmental cost of paper bags, hence being lower than the Pigouvian tax. The optimal common tax should equal a weighted average of the marginal environmental damage of the two bag types and would be lower than the Pigouvian tax on plastics if the marginal external cost of plastic bags exceeds that for paper bags. The empirical analysis shows that for default parameters, the variation in tax level across the studied scenarios is small. It also shows that if Pigouvian taxes cannot be implemented, a common uniform tax on both bag types would result in a higher welfare gain than a tax on plastic bags alone. Sensitivity analysis reveals that the level of the second-best taxes and their associated environmental and welfare impacts are sensitive to assumptions regarding the littering rate and decay rate of plastic bags in the marine environment.

GST: A Journey Towards Excellence in Taxonomy

Goods and services tax is a uniform indirect tax levied on all goods and services produced in the country and all goods and services imported from abroad. GST is a single uniform indirect tax which will treat India as one market. In today’s scenario we pay various taxes i.e. Direct and Indirect taxes, which are felt as burden on us and due to these taxes the corruption is increasing. So, to overcome from all these taxation system the Central Government has decided to make one tax system i.e. Goods and Services Tax (GST). GST is one of the most critical tax reforms in India. It is a comprehensive tax system that will subsume all indirect taxes of State and central Governments and whole economy into seamless nation in national market. It is expected to remove the burden of existing indirect tax system and play an important role in growth of India. GST includes all Indirect Taxes which will help in growth of economy and proves to be more beneficial than the existing tax system. GST will also help to accelerate the overall Gross Domestic Product (GDP) of the country. GST is now accepted all over the world and countries are using it for sales tax system. This paper will help to show that, what will be the impact of GST after its implementation, difference between present Indirect Taxes and GST and what will be the benefits and challenges of GST after implementation

Why a uniform carbon tax is unjust, no matter how the revenue is used, and should be accompanied by a limitarian carbon tax

ABSTRACT A uniform carbon tax with equal per capita dividends is usually advocated as a cost-effective way of reducing greenhouse gas (GHG) emissions without increasing, and in many cases even reducing, economic inequality, in particular because of the positive balance between the carbon taxes paid by the worse off and the carbon dividends they receive back. In this article, I argue that a uniform carbon tax reform is unjust regardless of how the revenue is used, because it does not discourage the rich from indulging in wasteful emissions. This is at odds with a normative account of the distribution of the GHG budget that I define as emissions limitarianism, which is a climate derivative of economic limitarianism. Emissions limitarianism holds that, under low GHG budget conditions, emissions permits should not be used to achieve functionings that over-consume the GHG budget without producing significant welfare gains relative to the achievement of alternative functionings. Accordingly, I argue that a uniform carbon tax should be complemented by a limitarian carbon tax, which restricts the capabilities of the rich to achieve wasteful emission-generating functionings. The article adopts a methodological multi-level perspective on capabilities as a measure of welfare, distinguishing between basic, secondary and tertiary capabilities.

Infrastructures, Taxation and Performance of Small and Medium Enterprises in Nigeria: Evidence from Calabar Metropolis.

This study examined the effects of infrastructural development and taxation on the performance of micro and small enterprises in Calabar Metropolis. The study adopted the survey design. The sample of the study was 370 micro and small enterprises in Calabar Metropolis, the instrument of data collection were the questionnaire and the data collected was analyzed using the chi-square technique. From the chi-square result, it was indicated that there is a significant effect of electricity supply on profitability of micro and small enterprises in Calabar Metropolis, there is a significant effect of road infrastructures on product/service delivery of micro and small enterprises in Calabar Metropolis and there is no significant effect of taxation on the performance of micro and small enterprises in Calabar Metropolis. Based on the findings, the study recommended that government should come up with uniform tax policies that will aid development of small scale businesses in Calabar Metropolis, in order to obtain a vibrant and flourishing small scale business sector, the tax policy needs to be appropriate such that it will neither be a burden to the small scale businesses nor discourage voluntary compliance, government should evolve a tax policy that would encourage investments in small scale businesses.

Supporting punishment via taxation in a structured population

Taxes are an essential and uniformly applied institution for maintaining modern societies. However, the levels of taxation remain an intensive debate topic among citizens. If each citizen contributes to common goals, a minimal tax would be sufficient to cover common expenses. However, this is only achievable at high cooperation level; hence, a larger tax bracket is required. A recent study demonstrated that if an appropriate tax partially covers the punishment of defectors, cooperation can be maintained above a critical level of the multiplication factor, characterizing the synergistic effect of common ventures. Motivated by real-life experiences, we revisited this model by assuming an interactive structure among competitors. All other model elements, including the key parameters characterizing the cost of punishment, fines, and tax level, remain unchanged. The aim was to determine how the spatiality of a population influences the competition of strategies when punishment is partly based on a uniform tax paid by all participants. This extension results in a more subtle system behavior in which different ways of coexistence can be observed, including dynamic pattern formation owing to cyclic dominance among competing strategies.

What Drives the Performance of Value-Added Tax? Investigating the Effectiveness of Tax Administration in Serbia

Abstract It is generally accepted that within nations devoid of significant limitations on administrative capacity, all products and services should be subject to a uniform value-added tax (VAT). If compliance is impeccable, the c-efficiency of VAT in these countries, which measures actual revenue over prospective revenue, should be one. The establishment of a proficient VAT administration, characterized by streamlined processes and procedures, is advantageous for many stakeholders. This includes national administrations as well as individual taxpayers and citizens. The study used primary data sources to identify the relationship between tax administration and the performance of VAT. This paper offers an assessment of tax administration effectiveness in Serbia in the period from 2005 to 2022. The investigation aims to accumulate empirical information regarding administrative components that affect the c-efficiency ratio through careful observation and data collection. The study assured that tax administration significantly affects the performance of VAT. The outcome variable, the c-efficiency ratio is highly affected by the effectiveness of tax administrators.

Does higher tax rate affect tobacco usage? Unravelling the nexus between tobacco regulatory control and public health concern

ObjectivesBangladesh stands as a prominent global consumer of tobacco, with alarming consequences on public health. The Global Adult Tobacco Survey reported that tobacco consumption claimed over 126 000 lives in 2018, contributing to 13.5% of all deaths in the country. This study aims to explore the effectiveness of higher tax rates and tobacco use regulation as control mechanisms in mitigating tobacco consumption and health care cost burden, with a particular emphasis on its implications for public health. MethodsThis study is based on the annual time series data over the period 2000–2020. The study employs the ordinary least square method to analyze the quantitative confirming the stationarity of data at level. This research uses different models to investigate individual effects and combined effects on both tobacco consumption and tobacco health care cost burden. ResultsThe study finds a negative relationship between tobacco tax rate and tobacco consumption. More specifically, the higher tax rate of tobacco (low (β = −0.3495), medium (β = −0.2319), high (β = −0.9033), premium (β = −0.7322), filtered (β = −0.2114), and non-filtered (β = −0.3452) categories) is significant to reduce tobacco use at 1% level of significance. The study finds similar results when it applied tobacco retail price instead of tobacco tax rate as the independent variable. Finally, the study investigates the impact on health care cost through tobacco consumption, tobacco control law, growth rate, export-import, and tobacco production. The results indicate that tobacco consumption, export-import, and tobacco production increases health care cost burden while tobacco use regulatory decreases it. By reducing tobacco consumption, higher taxes and tobacco use regulation contribute to alleviating the burden on the healthcare system, promoting healthier lifestyles, and aligning with global health objectives. ConclusionsHigher tax rate on tobacco products is necessary to increase the retail price so that tobacco users cannot consume tobacco. Specific tax and uniform tax base are needed so that tobacco users cannot switch to lower priced brands. Tobacco control laws need to revised and proper implementation should be ensured as well, to achieve the goal of tobacco free Bangladesh by 2040. Tobacco-related diseases, responsible for a significant proportion of deaths in the country, could witness a considerable decline with the successful implementation of higher tax rates and tobacco use regulation. This study provides insights that not only contribute to the economic discourse but also accentuate the broader public health benefits arising from effective tobacco taxation policies.

Critical analysis of tobacco taxation policies in Pakistan after two decades of FCTC: Policy gaps and lessons for low- and middle-income countries.

Tobacco taxation remains a poorly used intervention to control tobacco use in many low- and middle-income countries (LMICs) including Pakistan even after two decades of FCTC adoption. This study identifies gaps and implementation challenges in the current Tobacco Taxation and Pricing Policies (TTPP) in Pakistan, and highlights key policy implications and lessons for LMICs to strengthen tobacco control measures. We used qualitative document analysis to examine the policy documents to assess the TTPP against the WHO Framework Convention on Tobacco Control (FCTC) guidelines for the implementation of Article 6 of the FCTC. In addition, we used secondary data on tobacco tax and prices to assess the impact of TTPP on tobacco affordability in the country. Although Pakistan taxes raw tobacco, cigarettes and other tobacco products (cigarillos, cigars, cheroots), the existing TTPP falls below the WHO FCTC requirements of: uniform tax level, simple tax structure and 70% share of excise tax in the price of a product's pack; among others. There are also multiple issues in tobacco tax administration such as lack of monitoring. This is leading to the availability of highly affordable tobacco products in the country. Pakistan does not have a clear strategy on using tobacco taxation and prices as a public health tool in the country. Existing TTPP face dual issues of flawed structure and poor administration translating into highly affordable tobacco products and low revenues in the country. There is a need to introduce multisectoral tobacco control policies in countries like Pakistan in the context of the tobacco sector political economy.

Four Years of Goods and Services Tax in India: Road Ahead

The ideology behind GST was to reduce the multiplicity of existing indirect taxes and implement a uniform taxation structure across the nation. A perfect GST would have been wherein the GSTs are taxed at a single tax rate, subject to minimal or no exceptions. However, for a country like India, a tiered tax rate structure becomes inevitable to take into account the larger social agenda. GST is in the interest of trade and industry as it would do away with multiplicity of taxes and their cascading impacts. It will lead to the creation of a unified market for facilitating seamless movement of goods across the states. By subsuming a large number of Central and State taxes into a single tax, it would mitigate cascading effects or double taxation in a major way and pave the way for a national common market. However, we need to keep in mind that taxation policy has to be transparent, predictable and inclusive. This alone can maximise the favourable impact of GST on investment and growth. There is a strong case for phasing out a lot of exemptions. The GST council should seriously work on strengthening the GST system.

Centralized versus Decentralized Cleanup of River Water Pollution: An Application to the Ganges

We exploit the public good attributes of Ganges water pollution cleanup and theoretically analyze an aggregate economy of two cities—Kanpur and Varanasi—through which the Ganges flows. Our specific objective is to study whether water pollution cleanup in these two cities ought to be provided in a centralized or in a decentralized manner. We first determine the efficient cleanup amounts that maximize the aggregate surplus from making the Ganges cleaner in the two cities. Second, we compute the optimal amount of water pollution cleanup in the two cities in a decentralized regime in which spending on cleanup is financed by a uniform tax on the city residents. Third, we ascertain the optimal amount of water pollution cleanup in the two cities in a centralized regime subject to equal provision of cleanup and cost sharing. Fourth, we show that if the two cities have the same preference for pollution cleanup, then centralization is preferable to decentralization as long as there is a spillover from pollution cleanup. Finally, we show that if the two cities have dissimilar preferences for pollution cleanup, then centralization is preferable to decentralization as long as the spillover exceeds a certain threshold.

Impact of Goods and Services Tax (GST) on Retail Business Productivity

The Goods and Services Tax (GST) was introduced to simplify the tax system by eliminating the cascading effect of multiple taxes, leading to uniform tax rates across states and the creation of a unified market for goods and services. This research aims to investigate how the implementation of GST has impacted the productivity of India’s retail industry. By replacing various indirect taxes, GST streamlined the tax structure and aimed to promote ease of doing business, reduce compliance burdens, and potentially boost productivity in the retail sector. The study examines different aspects, including tax structure, supply chain efficiency, tax evasion, small and medium enterprises (SMEs), tax compliance, and consumer prices, to assess the overall effect of GST on the productivity of the retail business.

Taxation of Consumption and Labor Income: A Quantitative Approach

I quantitatively characterize optimal consumption and labor income taxes in a structural life-cycle model of household consumption, saving, and employment choices that allows for irreversibility of durable goods and preference heterogeneity. I find that durables should be subsidized and nondurables should be taxed at a uniform rate. The durable subsidy is driven by the life-cycle features of the model together with durables’ irreversibility and borrowing constraints. Uniform taxation on nondurables holds under exogenous and endogenous—fully or weakly separable—labor supply and it relies on homogeneity of intertemporal preferences. Allowing for government’s equity concerns, I show that the model rationalizes the tax practice. (JEL D15, G51, H21, H23, H24, H31, J22)

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.

Effect of Multiple Taxation on Performance of SMEs in Bayelsa State, Nigeria

The goal of this research is to find out how Bayelsa State's SMEs are affected by the state's numerous taxes. There are numerous taxes, levies, and charges that make up the bulk of the cost. An investigation into the impact of different taxes on small business investment is the subject of this study. A survey with a sample of 100 small and medium-sized businesses served as the basis for this investigation. A questionnaire was used to gather information. The data was analysed using simple percentages and frequencies, and the study hypotheses were tested using ANOVA. According to the study, an SME's investments are harmed by various taxes. Furthermore, there is a strong link between the amount of investment made by small businesses and their ability to pay taxes. When imposing taxes on small and medium-sized enterprises (SMEs), the government should consider increasing their capital allowances. When designing tax policies, the government should consider the size of businesses in Bayelsa State, as well as provide uniform tax rules.

Occupations, retirement, and the value of disability insurance

Occupations vary greatly in physical intensity, and there are, correspondingly, many differences in later-life work disability risk, retirement patterns, and applications for Social Security Disability Insurance (SSDI)—a national program that insures shocks to work productivity due to disability, with about nine million current beneficiaries in the U.S. In light of its widespread coverage and large differences in utilization across occupations, this paper aims to measure the value of the SSDI program across a broad population and the extent to which it influences the major choice of occupation. Using data from the Health and Retirement Study and O*NET, I estimate a life-cycle equilibrium model of occupational choice, work, savings, and disability at older ages, and find that incorporating occupations and preference heterogeneity is an integral part of understanding work and SSDI application behavior. While SSDI coverage is nearly universal and the premiums from workers are uniform, estimates suggest that the value of the program varies greatly, from being worth 2.1 to 14.5 percent of earned income—depending on preferences and choice of occupation—though for all groups it is welfare improving. I also find that SSDI plays an important role in the choice of occupation for older workers, providing an insurance value that results in over ten percent more people choosing physically intense, blue-collar occupations at older ages. This overall effect, however, masks the underlying selection of less risk-averse individuals into blue-collar jobs, which, if not accounted for, would lead to overstating the effects of the SSDI program on behavior. A counterfactual experiment aimed at eliminating the distortion created by uniform SSDI tax rates shows that—even without any additional employer accommodation of disabled workers—occupation-specific tax rates lead to fewer aggregate work-disabled years.

Impact of a sugar-sweetened beverage tax on sugar producers in Ukraine.

Taxes on sugar-sweetened beverages can promote health and raise revenue. Whether these taxes negatively impact domestic sugar producers, an argument often made by opponents, is understudied. We extended a simulation model based on a uniform specific volume-based tax of UAH 4/L in Ukraine. We estimated best- and worst-case scenarios for reductions in domestic sugar demand to be 162 and 23 000 metric tons. This is at worst ∼0.5% of current exports, meaning decreases in domestic demand could easily be absorbed by export markets given export trends. Due to highly protectionist sugar sector policy, sugar producers would not be able to fully substitute domestic sales revenues through increased export revenues, but the worst-case revenue gap was <0.5% of total sectoral output in recent years. Overall, introducing a tax on sugar-sweetened beverages in Ukraine is likely to have a very limited impact on domestic sugar producers.