Use Of Fiscal Instruments Research Articles

What Role Can Taxes and Subsidies Play in Changing Diets?

The study examines the use of fiscal instruments to achieve a healthier diet while reducing CO2 emissions. The methodology is to minimize the deadweight losses in attaining a healthy diet. Given that the shift should not impose a large burden on the consumer, the analysis is conducted with a system of taxes and subsidies - a bonus-malus framework. The model generates heavy subsidies on carbohydrates and heavy taxes on red meats, which would be politically unacceptable. A more plausible goal may be to aim to close the gap between the current diet and a healthier one by 20-25 percent.

TAX COMPETITION AND THE RELOCATION PROCESS

In this article the author discusses the problem relating to the tax competition in the context of relocation as a process resulting from the ongoing globalization of economic activity. For this purpose the author discusses the essence and causes of tax competition and relocation. The conclusion is that relocation leads usually to an increase in the competitiveness of enterprises, their development, and thus to the development of the economies of individual countries. Healthy competition leads to streamlining the fiscal policies of competing countries and to the creation of a business-friendly atmosphere. Therefore, the role of governments, particularly in the developing countries, is such action, including the use of fiscal instruments, that would enable the achievement of competitive advantage in the international market and socio-economic development.

FISCAL STATE POLICY FOR SUSTAINABLE DEVELOPMENT

One of the most important measures to be taken for the development of sustainable economy in Latvia is to implement an effective fiscal policy. It means a complex and well timed use of fiscal instruments to regulate economy. Evaluating the proposals of the government and the measures taken for the stabilization of economy we can make the conclusion that they have not always been effective and economically justified. Several rearrangements in the field of planning taxes and budget have been late. The aim of the article is on the basis of the theoretical viewpoints, to undertake a critical assessment of the fiscal measures taken by the government of Latvia and to make recommendations for the improvement of the effectiveness of the fiscal policy in Latvia.

Macroeconomic Policy Towards Raising Economy

In our country, the post-industrial society is build in the context of the European integration of our national structures, a process that was assumed to create a larger convergence with the continental economic pole, and to consolidate the cultural and economic development of the citizens. Inside such overview, the crisis that brought a negative growth in our country and unbalanced the national markets of goods and labor was administrated in a simple manner by the authorities, who realized that it was much easier to raise expenses than to collect incomes in an unfortunate conjuncture. The comparative analysis of the strategic goals of the United Europe with the currently developed possibilities of the states to lever the financial and economic evolution, reveal the possibilities of the authorities’ intervention to gain a favorable feed-back from the depressed economic environment. In Romania, depression started in 2008, and continued per 2009 and 2010, unemployment rose, and the foreign debt rose during the last three years. The short term tools used by the leadership and the current authorities were focused on the use of fiscal instruments, and theoretically on the “Supply Side” reviewed point. In this paper we express our point of view regarding the solution of re-launching the economy by fiscal policy. Also, we propose other solutions in the service of the society.

Minimum wage or negative income tax: why skilled workers may favor wage rigidities

In this article, we analyze the political choice of the extent and means of income redistribution between high and low-skilled workers. Redistributive tools encompass both fiscal transfers (a negative income tax) and a minimum wage requirement. We assume the use of fiscal instruments alone to be the first-best means of redistribution. We show that high-skilled workers may favor a second-best, minimum wage requirement because it increases unemployment, hence raising the marginal cost of redistribution, and creates a justification for them to moderate low-skilled workers’ claim for redistribution.

The Costs of Fiscal Inflexibility

Extending Gali and Monacelli (2004), we build an N-country open economy model, where each economy is subject to sticky wages and prices and, potentially, has access to sales and income taxes as well as government spending as fiscal instruments. We examine an economy either as a small open economy when all three fiscal instruments are freely available, we show analytically that the welfare impact of technology and mark-up shocks can be completely eliminated (in the sense that policy can replicate the efficient flex price equilibrium), whether policy acts with discretion or commitment. However, once any one of these fiscal instruments is excluded as a stabilisation tool, costs can emerge. Using simulations, we find that the useful fiscal instrument in this case (in the sense of reducing the welfare costs of the shock) is either income taxes or sales taxes. In contrasts, having government spending as an instrument contributes very little. The results for an individual member of a monetary union facing an idiosyncratic technology shock (where monetary policy in the union does not respond) are very different. First, even with all fiscal instruments freely available, the technology shock will incur welfare costs. Government spending is potentially useful as a stabilisation device, because it can act as a partial substitute for monetary policy. Finally, sales taxes are more effective than income taxes at reducing the costs of a technology shock under monetary union. If all three taxes are available, they can reduce the impact of the technology shock on the union member by around a half, compared to the case where fiscal policy is not used. Finally we consider the robustness of these results to two extensions. Firstly, introducing government debt, such that policy makers take account of the debt consequences of using fiscal instruments as stabilisation devices, and, secondly, introducing implementation lags in the use of fiscal instruments. We find that the need for debt sustainability has a very limited impact on the use of fiscal instruments for stabilisation purposes, while implementation lags can reduce, but not eliminate, the gains from fiscal stabilisation.

Fiscal Stabilisation Policy and Fiscal Institutions

In this paper we analyse counter-cyclical fiscal policy within the context of a microfounded analysis of business-cycle stabilization. We show that tax and spending instruments can have a useful counter-cyclical role, even after allowing for the distortionary nature of the instruments and the need for debt sustainability. A critical barrier to the use of fiscal instruments may be political economy concerns, and we survey recent suggestions involving alternative fiscal policy institutions.

Fiscal Stabilization Policy and Fiscal Institutions

In this paper we analyse counter-cyclical fiscal policy within the context of a microfounded analysis of business-cycle stabilization. We show that tax and spending instruments can have a useful counter-cyclical role, even after allowing for the distortionary nature of the instruments and the need for debt sustainability. A critical barrier to the use of fiscal instruments may be political economy concerns, and we survey recent suggestions involving alternative fiscal policy institutions.

Fiscal Policy and Fiscal Rules in the European Union

This paper discusses the theory and practice of counter-cyclical fiscal policy to draw conclusions relevant for the fiscal architecture of the European Union. It starts by reviewing major lines of criticism on counter-cyclical fiscal policy, such as the existence of various lags, versions of Ricardian equivalence, non-Keynesian effects of fiscal policies and public choice considerations leading to asymmetry in the use of fiscal instruments. The paper then focuses on factors hampering implementation of a counter-cyclical fiscal policy. First, estimates of counterfactual variables – current and future – that are needed for running the policy are subject to significant margins of uncertainty. Second, relationships between national income on the one side and public revenues and spending on the other side tend to be unstable. Third, precise and timely measures of fiscal positions are largely non-existent. Finally, political requirements for an effective counter-cyclical policy are not met. The pre-Maastricht experience of EU countries, with a massive buildup of public debt despite fiscal-friendly environment, suggests a need for fiscal rules to avoid Argentina-like debt crises. Diverging initial positions of countries call for flexible approach as to the time needed to conform but not for relaxation of the rules, as it recently happened to the Stability and Growth Pact.

An Essay on Fiscal Federalism

This paper is a selective survey of fiscal federalism. It begins with a brief review and some reflections on the traditional theory of fiscal federalism: the assignment of functions to levels of government, the welfare gains from fiscal decentralization, and the use of fiscal instruments. It then explores a series of important topics that are the subject of current research: laboratory federalism, interjurisdictional competition and environmental federalism, the political economy of fiscal federalism, market-preserving federalism, and fiscal decentralization in the developing and transitional economies.

Nudging and rectifying: the use of fiscal instruments for regulatory purposes

The paper explores two fiscal devices which, while falling short of the ideal which economists have advocated, may induce behavioural change and thus operate effectively as regulatory instruments: the ‘nudging’ tax, which is calculated according to what level of payment is likely to reduce undesired activity; and the ‘rectificatory’ tax, which relates the sum payable to part of the harm caused by the activity. The former has been widely used, and with some success, but there is tension between its regulatory and revenue-raising functions. The latter seems better designed to meet goals of corrective justice than to modify conduct in an economically appropriated way.

The Use of Fiscal Instruments in European Environmental Policy: Review Essay

INTRODUCTION Once a government has defined its environmental goals, it can execute them by means of different policy instruments. The following environmental policy instruments can be distinguished (Dente, 1995; Golub, 1998; OECD,1989): (i) instruments of social regulation, such as transfer of information (environmental education, environmental labels, environmental impact reports, etc.), self-regulation (environmental policy agreements, self-control), and environmental care systems; (ii) instruments of financial aid, such as subsidies, soft loans, and fiscal incentives (investment deduction, tax reduction and tax exemption); (iii) instruments of planning (Deketelaere, 1997, I), such as macro-planning and micro-planning, binding planning and non-binding planning, sectoral planning and non-sectoral planning; (iv) instruments of direct regulation, such as permits, prohibitions and restrictions, and different sorts of requirements (quality-demands, product-demands, emission-demands, design demands, construction demands and production demands); (v) instruments of market regulation (Baumol, 1988; Helm, 1991; Guppes, 1992; Jenkins, 1992, II; OECD, 1989), such as liability rules, marketable emission rights, deposit and refund system, enforcement incentives and environmental levies. In this contribution, each of these environmental policy instruments will be analyzed in general. After that, the instruments which have already been used in European environmental policy will be examined. Finally, attention will be paid to the use of fiscal instruments in European environmental policy.

A global and multicriterial environmental taxation model for industrial pollution prevention and control

The more general use of fiscal instruments could be an appropriate means to ensure the application of the prevention principle in the field of industrial pollution. In this respect, this paper proposes an original incentive system, grounded in a comprehensive approach to the industrial polluting entities. The motivations, the main principles and the sought distinctive properties of this approach give rise to the formulation of several taxation criteria. The global taxation model enabling the appropriate integration of these criteria is grounded in an aggregation method–the method of eco-impacts–which was built on securing several improvements of the ecological optimization method. Conclusions are drawn on the potential properties of such a model with respect to the traditional evaluation criteria of economic instruments. Copyright © 1999 John Wiley & Sons, Ltd and ERP Environment.

Human Resources and Social Support Policy in Canada

reached by the Commissioners. This reviewer's modest goal is to provide the reader with the basic substance of Part V of the Report and to comment on a limited number of topics. The topics selected for comment reflect a combination of personal interest and 'best guess' as to the overall importance that the topic is likely to be accorded by federal and provincial governments. The introduction to Part V attempts to define, in very broad terms the goals of social and human resource policy, particularly their impact on the individual. In addition, the Commissioners describe the mechanism used, up to now, to reach the social goals. While most of these goals could be achieved by public intervention in the marketplace, the Commissioners believe that Canada's emphasis on efficiency, in terms of maximizing output, has led policy-makers to stress the use of insurance and fiscal instruments to achieve social objectives. There is no explicit mention, however, that obligatory insurance and the use of fiscal instruments may themselves be a barrier to maximizing economic efficiency. Indeed, they may be more inefficient than direct intervention in the market under certain conditions. Chapter 14 traces the evolution of social and human resource policy using a substantial set of statistical data. Considerable reliance is placed on societal and economic indicators such as historical

Economic aspects of addiction policy.

One definition of policy or government action in the Oxford English Dictionary is "craftiness" i.e. cunning or deceit. Such qualities have to be employed by governments because of the potential vote-losing effects of radical addiction policies. Health promotion, in relation to addictive substances such as alcohol and tobacco in particular, involves a trade-off between the costs of such policies, especially to industry (which seeks regulation to protect itself from competitors), and the benefits--improvements in the quality and length of life. Measures of such benefits (quality-adjusted life-years or QALYs) are available now to use in the evaluation of competing health promotion policies to determine their efficiency at the margin. Analysis of the market for tobacco indicates that consumption has been falling generally in the UK except among teenagers who appear to be the target of the industry's advertising and sponsorship efforts. This fall in consumption appears to be explained by health promotion rather than the active use of fiscal instruments of control. The recognition of the health effects of passive smoking and the impact of advertising and sponsorship, especially on the young, are policy areas requiring careful review and the evaluation of the costs and benefits of competing policies.(ABSTRACT TRUNCATED AT 250 WORDS)