Pub Date : 2023-01-01DOI: 10.15826/jtr.2023.9.1.126
A. Pugachev
The purpose of this study is to consider the effects of indirect taxes, VAT in particular, on inequality. The study tests the hypothesis that indirect taxation in Russia does not have a significant impact on inequality but has a potential to reduce it. Methodologically, the study relies on correlation regression analysis, time series analysis, structural analysis and the index method. The data used for the analysis are provided by the Federal State Statistics Service (Rosstat) and Federal Tax Service for the period from 1992 to 2021. Calculations were conducted with the help of Data Analysis ToolPak in MS Excel. A classification of the types of economic inequality is proposed together with the corresponding fiscal instruments used to tackle each type. Indirect taxes are considered to be capable of reducing consumption inequality. To evaluate the influence of indirect taxation on inequality, the following parameters were considered: VAT-to-GDP ratio and the share of VAT in total tax revenues of the consolidated budget, share of revenue raised through 10% VAT in the total volume of VAT, and the decile ratio of consumption spending. It was found that indirect taxes in Russia do not have a significant impact on inequality. Although in some years VAT receipts accounted for a larger share in total tax revenues and in GDP and this trend was accompanied by lower levels of inequality, this happened because of the influence of other factors, for example, the use of the progressive scale of the personal income tax in the 1990s. To reduce inequality, a viable solution for the government would be to apply a system of differentiated VAT rates to balance disparities in consumption of the wealthiest and poorest households (these differences are reflected in Rosstat data on consumption). Moreover, since utilities, telecommunications and food constitute up to 70% of the poor’s expenditures, it would make sense to lower the VAT rate for these categories of goods and services while raising the rate for such categories as hospitality services, cafes and restaurants, recreation and leisure services because in total, these categories account for 13.2% of the expenditures of the wealthiest households. Unfortunately, in 2022, the government took the decision to apply zero-rated VAT to these services as part of the anti-crisis program.
{"title":"The Impact of Indirect Taxation on Inequality in Russia","authors":"A. Pugachev","doi":"10.15826/jtr.2023.9.1.126","DOIUrl":"https://doi.org/10.15826/jtr.2023.9.1.126","url":null,"abstract":"The purpose of this study is to consider the effects of indirect taxes, VAT in particular, on inequality. The study tests the hypothesis that indirect taxation in Russia does not have a significant impact on inequality but has a potential to reduce it. Methodologically, the study relies on correlation regression analysis, time series analysis, structural analysis and the index method. The data used for the analysis are provided by the Federal State Statistics Service (Rosstat) and Federal Tax Service for the period from 1992 to 2021. Calculations were conducted with the help of Data Analysis ToolPak in MS Excel. A classification of the types of economic inequality is proposed together with the corresponding fiscal instruments used to tackle each type. Indirect taxes are considered to be capable of reducing consumption inequality. To evaluate the influence of indirect taxation on inequality, the following parameters were considered: VAT-to-GDP ratio and the share of VAT in total tax revenues of the consolidated budget, share of revenue raised through 10% VAT in the total volume of VAT, and the decile ratio of consumption spending. It was found that indirect taxes in Russia do not have a significant impact on inequality. Although in some years VAT receipts accounted for a larger share in total tax revenues and in GDP and this trend was accompanied by lower levels of inequality, this happened because of the influence of other factors, for example, the use of the progressive scale of the personal income tax in the 1990s. To reduce inequality, a viable solution for the government would be to apply a system of differentiated VAT rates to balance disparities in consumption of the wealthiest and poorest households (these differences are reflected in Rosstat data on consumption). Moreover, since utilities, telecommunications and food constitute up to 70% of the poor’s expenditures, it would make sense to lower the VAT rate for these categories of goods and services while raising the rate for such categories as hospitality services, cafes and restaurants, recreation and leisure services because in total, these categories account for 13.2% of the expenditures of the wealthiest households. Unfortunately, in 2022, the government took the decision to apply zero-rated VAT to these services as part of the anti-crisis program.","PeriodicalId":53924,"journal":{"name":"Journal of Tax Reform","volume":null,"pages":null},"PeriodicalIF":0.4,"publicationDate":"2023-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"67260214","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-01-01DOI: 10.15826/jtr.2023.9.2.134
Anna P. Kireenko, Tatyana Y. Krasikova
Tax system creates various incentive effects that can influence an individual’s educational choice. Many studies have been conducted on the effect of tax incentives on education, however, no study that reveals such an effect has been conducted in Russia. With this in mind, we aimed to analyse whether the tax incentives for education influence the household’s decisions to receive an education in Russia. In this context, we analysed the correlation between the number of individuals who received tax deductions and the number of individuals who received education by regions of the Russian Federation. The data source was tax reporting data of Federal Tax Service and the 2020 census data. The research methodology includes methods of regression and correlation analysis. The results show that tax incentives for education have low impact on the of household’s decisions to receive an education in the Russian Federation. Tax deduction has a stable but weak positive association with total numbers of students. The calculated parameters of the model explain the dependence between the deduction for expenses for own education and quantity of people who receive education by 9.2% and dependence between the deduction for expenses for full-time education of children and quantity of people who receive education by 5.5%. There is low probability that the announced rise of the limit of social deduction in 2024 will change the situation. But government should continue to provide federal funding through tax benefits to promote voluntary compliance by fostering favourable taxpayer views of the tax system.
{"title":"Personal Income Tax Deductions and Demand for Education: Case of Russia","authors":"Anna P. Kireenko, Tatyana Y. Krasikova","doi":"10.15826/jtr.2023.9.2.134","DOIUrl":"https://doi.org/10.15826/jtr.2023.9.2.134","url":null,"abstract":"Tax system creates various incentive effects that can influence an individual’s educational choice. Many studies have been conducted on the effect of tax incentives on education, however, no study that reveals such an effect has been conducted in Russia. With this in mind, we aimed to analyse whether the tax incentives for education influence the household’s decisions to receive an education in Russia. In this context, we analysed the correlation between the number of individuals who received tax deductions and the number of individuals who received education by regions of the Russian Federation. The data source was tax reporting data of Federal Tax Service and the 2020 census data. The research methodology includes methods of regression and correlation analysis. The results show that tax incentives for education have low impact on the of household’s decisions to receive an education in the Russian Federation. Tax deduction has a stable but weak positive association with total numbers of students. The calculated parameters of the model explain the dependence between the deduction for expenses for own education and quantity of people who receive education by 9.2% and dependence between the deduction for expenses for full-time education of children and quantity of people who receive education by 5.5%. There is low probability that the announced rise of the limit of social deduction in 2024 will change the situation. But government should continue to provide federal funding through tax benefits to promote voluntary compliance by fostering favourable taxpayer views of the tax system.","PeriodicalId":53924,"journal":{"name":"Journal of Tax Reform","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2023-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135551264","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-01-01DOI: 10.15826/jtr.2023.9.2.135
Kurniawan Kurniawan, Agung Maulana, Yusuf Iskandar
The efficacy of the lockdown measures implemented by the Indonesian government in mitigating the spread of COVID-19 has been proven, albeit at the cost of significant economic repercussions. The Indonesian government expeditiously enacted a comprehensive tax and fee reduction policy as a precautionary measure against adverse shocks. This study tries to prove (through the SME’s perspective) whether the tax incentives provided by the government have a positive impact on SMEs in maintaining their sustainable financial performance that leads to the survival-recovery of SMEs. This study also tries to observe the moderating effect of the perceived effectiveness of the implementation of tax assistance to increase the positive influence of the policy. Researchers collected data through a survey by distributing questionnaires to 1026 SMEs in Cianjur, Sukabumi, Bandung, and Bogor cities and Regencies. The data were then analyzed using the PLS-SEM method with the help of SMARTPLS version 3. The results showed that tax incentives from the government for SMEs have a significant positive effect on their sustainable financial performance and survival-recovery of SMEs. Indirectly, government tax incentives positively affect SMEs’ survival-recovery via the mediating role of sustainable financial performance. In addition, the perceived effectiveness of tax policy implementation positively moderates the effect of this relationship, thus increasing the impact of tax incentives on sustainable financial performance. In the end, sustainable financial performance has been proven to positively influence the survival and recovery of SMEs during a pandemic. This research closes with government policy recommendations for helping SMEs recover their performance in future crises.
{"title":"Tax Incentive Policy and Recovery of SMEs in the post-COVID Period: The Moderating Role of Perceived Policy Effectiveness in Indonesia","authors":"Kurniawan Kurniawan, Agung Maulana, Yusuf Iskandar","doi":"10.15826/jtr.2023.9.2.135","DOIUrl":"https://doi.org/10.15826/jtr.2023.9.2.135","url":null,"abstract":"The efficacy of the lockdown measures implemented by the Indonesian government in mitigating the spread of COVID-19 has been proven, albeit at the cost of significant economic repercussions. The Indonesian government expeditiously enacted a comprehensive tax and fee reduction policy as a precautionary measure against adverse shocks. This study tries to prove (through the SME’s perspective) whether the tax incentives provided by the government have a positive impact on SMEs in maintaining their sustainable financial performance that leads to the survival-recovery of SMEs. This study also tries to observe the moderating effect of the perceived effectiveness of the implementation of tax assistance to increase the positive influence of the policy. Researchers collected data through a survey by distributing questionnaires to 1026 SMEs in Cianjur, Sukabumi, Bandung, and Bogor cities and Regencies. The data were then analyzed using the PLS-SEM method with the help of SMARTPLS version 3. The results showed that tax incentives from the government for SMEs have a significant positive effect on their sustainable financial performance and survival-recovery of SMEs. Indirectly, government tax incentives positively affect SMEs’ survival-recovery via the mediating role of sustainable financial performance. In addition, the perceived effectiveness of tax policy implementation positively moderates the effect of this relationship, thus increasing the impact of tax incentives on sustainable financial performance. In the end, sustainable financial performance has been proven to positively influence the survival and recovery of SMEs during a pandemic. This research closes with government policy recommendations for helping SMEs recover their performance in future crises.","PeriodicalId":53924,"journal":{"name":"Journal of Tax Reform","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2023-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135550927","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-01-01DOI: 10.15826/jtr.2023.9.2.140
Vince Ratnawati, Riska Anggraini, Ruhul Fitrios
This study aims to examine and analyze the direct influence among Machiavellian Traits, Perceptions of Ethics and Social Responsibility, and Risk Preference on Tax Consultant Ethical Decision Making. The novelty of this research is to use of the professionalism of tax consultants as members of the profession as a moderating variable. It is expected that the professionalism of the tax consultant can limit the occurrence of unethical decision making by tax consultant. The respondents were all tax consultants registered with the Indonesian Tax Consultants Association for the Pekanbaru region. Data analysis techniques in this study using Structural Equation Modeling– Partial Least Square (SEM-PLS) Smart-PLS Software version 4.0. This study found that Machiavellian traits, ethical perceptions and social responsibility, and risk preferences have an influence on the ethical decision-making of tax consultants. This study also found that professionalism moderates the effect of Machiavellian Traits, Perceptions of Ethics and Social Responsibility, and Risk Preference on Ethical Decision Making. This study offers theoretical and practical implications for strengthening attitudes that always prioritize ethics in every decision-making. Ethical decision making can be done by reducing Machiavellian traits, considering ethics and social responsibility, and always considering the risks that will be faced because of the decisions to be taken. The value of the study provides an academic contribution regarding the effect of Machiavellian traits, ethical perception, and social responsibility, and also risk preference, and the moderating role of professionalism in reducing unethical decision making.
{"title":"Determinants of Ethical Decision-Making: A Study on the Role of the Professionalism of Members of the Indonesian Association of Tax Consultants","authors":"Vince Ratnawati, Riska Anggraini, Ruhul Fitrios","doi":"10.15826/jtr.2023.9.2.140","DOIUrl":"https://doi.org/10.15826/jtr.2023.9.2.140","url":null,"abstract":"This study aims to examine and analyze the direct influence among Machiavellian Traits, Perceptions of Ethics and Social Responsibility, and Risk Preference on Tax Consultant Ethical Decision Making. The novelty of this research is to use of the professionalism of tax consultants as members of the profession as a moderating variable. It is expected that the professionalism of the tax consultant can limit the occurrence of unethical decision making by tax consultant. The respondents were all tax consultants registered with the Indonesian Tax Consultants Association for the Pekanbaru region. Data analysis techniques in this study using Structural Equation Modeling– Partial Least Square (SEM-PLS) Smart-PLS Software version 4.0. This study found that Machiavellian traits, ethical perceptions and social responsibility, and risk preferences have an influence on the ethical decision-making of tax consultants. This study also found that professionalism moderates the effect of Machiavellian Traits, Perceptions of Ethics and Social Responsibility, and Risk Preference on Ethical Decision Making. This study offers theoretical and practical implications for strengthening attitudes that always prioritize ethics in every decision-making. Ethical decision making can be done by reducing Machiavellian traits, considering ethics and social responsibility, and always considering the risks that will be faced because of the decisions to be taken. The value of the study provides an academic contribution regarding the effect of Machiavellian traits, ethical perception, and social responsibility, and also risk preference, and the moderating role of professionalism in reducing unethical decision making.","PeriodicalId":53924,"journal":{"name":"Journal of Tax Reform","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2023-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135551270","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-01-01DOI: 10.15826/jtr.2023.9.1.125
Y. M. Basri, R. Natariasari, B. Devitarika
There has been global economic fallout from the Pandemic COVID-19. Micro, Small and Medium Enterprises (MSME) is one of the industries hit worst. Many MSMEs have seen their profits decline or even disappear. Consequently, tax income dropped. In order to raise tax revenue, the government has implemented a number of reforms, one of which is a push for greater tax compliance among MSMEs. This study aims to analyze the effect of providing tax incentives and understanding taxpayers on MSME tax compliance during the COVID-19 pandemic. This study also examines risk preferences as moderation. The population in this study is the MSMEs food sector in the city of Pekanbaru, Indonesia. Samples were selected using convenience sampling. A total of 397 MSMEs in the food sector participated in this study. During the months of December 2021 and February 2022, data was gathered by distributing questionnaires to taxpayers directly and also by using Google forms. Data analysis techniques used SEM with Warp PLS. Tests show that tax incentives affect the compliance of MSME taxpayers during the COVID 19. This study demonstrates that understanding MSME tax rules can boost compliance. The high risk faced by taxpayers can reduce tax compliance even though the government provides tax incentives. However, with a high level of understanding, even though taxpayers have risks, they still carry out their tax compliance. This study aids the government’s effort to give tax incentives and outreach to better comprehend the needs of MSME taxpayers.
{"title":"MSMEs Tax Compliance in Indonesia During Pandemic COVID-19: The Role of Risk Preference as Moderation","authors":"Y. M. Basri, R. Natariasari, B. Devitarika","doi":"10.15826/jtr.2023.9.1.125","DOIUrl":"https://doi.org/10.15826/jtr.2023.9.1.125","url":null,"abstract":"There has been global economic fallout from the Pandemic COVID-19. Micro, Small and Medium Enterprises (MSME) is one of the industries hit worst. Many MSMEs have seen their profits decline or even disappear. Consequently, tax income dropped. In order to raise tax revenue, the government has implemented a number of reforms, one of which is a push for greater tax compliance among MSMEs. This study aims to analyze the effect of providing tax incentives and understanding taxpayers on MSME tax compliance during the COVID-19 pandemic. This study also examines risk preferences as moderation. The population in this study is the MSMEs food sector in the city of Pekanbaru, Indonesia. Samples were selected using convenience sampling. A total of 397 MSMEs in the food sector participated in this study. During the months of December 2021 and February 2022, data was gathered by distributing questionnaires to taxpayers directly and also by using Google forms. Data analysis techniques used SEM with Warp PLS. Tests show that tax incentives affect the compliance of MSME taxpayers during the COVID 19. This study demonstrates that understanding MSME tax rules can boost compliance. The high risk faced by taxpayers can reduce tax compliance even though the government provides tax incentives. However, with a high level of understanding, even though taxpayers have risks, they still carry out their tax compliance. This study aids the government’s effort to give tax incentives and outreach to better comprehend the needs of MSME taxpayers.","PeriodicalId":53924,"journal":{"name":"Journal of Tax Reform","volume":null,"pages":null},"PeriodicalIF":0.4,"publicationDate":"2023-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"67259977","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-01-01DOI: 10.15826/jtr.2023.9.1.131
M. Syukur, C. Jongsureyapart
Tax avoidance is an effort to avoid paying more taxes lawfully, but it results in a tax revenue loss for the government. Even though the nominal avoided tax is enormous in advanced economies, the impact of tax avoidance is more severe in emerging economies. Thailand is a developing country whose government has been actively putting action to tackle aggressive tax avoidance. Like other similar economies, Thailand invites more foreign investors to invest in its local businesses. However, literature has said that ownership level can influence tax avoidance, and ownership by foreign shareholders in emerging countries can increase tax avoidance. Thus, examining whether foreign ownership increases tax avoidance in a developing country is crucial and interesting. By owning shares in the company, foreign investors have the power to influence the firm’s decision-making process, including the decision for tax avoidance. This paper is the pioneer in discussing foreign ownership and tax avoidance in a Thai setting in its 100 most profitable companies. The observation is based on the five-year observations during 2015–2019. We measured tax avoidance using effective tax rate (ETR) and cash-flow ETR and manually collected foreign ownership data from the 500 annual reports. The statistical test verified that foreign ownership has a positive relationship with tax avoidance, which means that greater foreign ownership leads to a greater level of tax avoidance. This study recommends policymakers monitor the level of foreign ownership/control to limit aggressive tax avoidance that could be practised in the country.
{"title":"The influence of foreign ownership on tax avoidance in Thailand: A study from an emerging economy","authors":"M. Syukur, C. Jongsureyapart","doi":"10.15826/jtr.2023.9.1.131","DOIUrl":"https://doi.org/10.15826/jtr.2023.9.1.131","url":null,"abstract":"Tax avoidance is an effort to avoid paying more taxes lawfully, but it results in a tax revenue loss for the government. Even though the nominal avoided tax is enormous in advanced economies, the impact of tax avoidance is more severe in emerging economies. Thailand is a developing country whose government has been actively putting action to tackle aggressive tax avoidance. Like other similar economies, Thailand invites more foreign investors to invest in its local businesses. However, literature has said that ownership level can influence tax avoidance, and ownership by foreign shareholders in emerging countries can increase tax avoidance. Thus, examining whether foreign ownership increases tax avoidance in a developing country is crucial and interesting. By owning shares in the company, foreign investors have the power to influence the firm’s decision-making process, including the decision for tax avoidance. This paper is the pioneer in discussing foreign ownership and tax avoidance in a Thai setting in its 100 most profitable companies. The observation is based on the five-year observations during 2015–2019. We measured tax avoidance using effective tax rate (ETR) and cash-flow ETR and manually collected foreign ownership data from the 500 annual reports. The statistical test verified that foreign ownership has a positive relationship with tax avoidance, which means that greater foreign ownership leads to a greater level of tax avoidance. This study recommends policymakers monitor the level of foreign ownership/control to limit aggressive tax avoidance that could be practised in the country.","PeriodicalId":53924,"journal":{"name":"Journal of Tax Reform","volume":null,"pages":null},"PeriodicalIF":0.4,"publicationDate":"2023-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"67260015","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-01-01DOI: 10.15826/jtr.2023.9.1.132
Iu. E. Labunets, I. Mayburov
The study focuses on the problem of rationality of economic entities, in particular the rationality of their tax and economic behavior in a given period. The data on enterprises in the Russian foreign sector are used to examine the relationship between the levels of rationality observed in their economic and tax behavior. The representative sample includes 1,206 micro-, small and medium-sized enterprises that specialize in logging, wood processing and wholesale timber trade and have forest lease agreements. The study covers the period from 2017 to 2021. Rationality of corporate behavior is understood as profit maximizing behavior or, in other words, as companies’ pursuit of maximum utility. Our theoretical review of the research on rationality in economic and tax behavior has led us to formulate the following assumptions. In economic behavior, rationality manifests itself primarily in companies’ efforts to improve the efficiency of resource use (labor, finance, and tangible assets). Rationality in tax behavior is associated with companies’ efforts to minimize their tax expenditures. Therefore, to assess the rationality of economic behavior, we used such indicators as labor productivity, return on own capital, return on borrowed capital, return on fixed assets, return on operating assets, business profitability, the stage of the lifecycle, and tax risk management. To assess rationality of tax behavior, we estimated the level of audit risk, that is, each company’s chances of being audited. Our study has confirmed the hypothesis that the rationality of tax and economic behavior has an inverse relationship. In other words, the more rational is the economic behavior of a firm, the less rational is its tax behavior. The strength of this relationship is impacted by three main factors: 1) the size of a business; 2) the level of opportunism; and 3) the type of activity. For the enterprises in the forestry sector covered by our analysis, we found that a change in the level of rationality of their tax behavior in 72.9% of cases leads to a change in the level of rationality of their economic behavior.
{"title":"Rationality of the Tax and Economic Behavior of Enterprises in the Russian Forestry Sector","authors":"Iu. E. Labunets, I. Mayburov","doi":"10.15826/jtr.2023.9.1.132","DOIUrl":"https://doi.org/10.15826/jtr.2023.9.1.132","url":null,"abstract":"The study focuses on the problem of rationality of economic entities, in particular the rationality of their tax and economic behavior in a given period. The data on enterprises in the Russian foreign sector are used to examine the relationship between the levels of rationality observed in their economic and tax behavior. The representative sample includes 1,206 micro-, small and medium-sized enterprises that specialize in logging, wood processing and wholesale timber trade and have forest lease agreements. The study covers the period from 2017 to 2021. Rationality of corporate behavior is understood as profit maximizing behavior or, in other words, as companies’ pursuit of maximum utility. Our theoretical review of the research on rationality in economic and tax behavior has led us to formulate the following assumptions. In economic behavior, rationality manifests itself primarily in companies’ efforts to improve the efficiency of resource use (labor, finance, and tangible assets). Rationality in tax behavior is associated with companies’ efforts to minimize their tax expenditures. Therefore, to assess the rationality of economic behavior, we used such indicators as labor productivity, return on own capital, return on borrowed capital, return on fixed assets, return on operating assets, business profitability, the stage of the lifecycle, and tax risk management. To assess rationality of tax behavior, we estimated the level of audit risk, that is, each company’s chances of being audited. Our study has confirmed the hypothesis that the rationality of tax and economic behavior has an inverse relationship. In other words, the more rational is the economic behavior of a firm, the less rational is its tax behavior. The strength of this relationship is impacted by three main factors: 1) the size of a business; 2) the level of opportunism; and 3) the type of activity. For the enterprises in the forestry sector covered by our analysis, we found that a change in the level of rationality of their tax behavior in 72.9% of cases leads to a change in the level of rationality of their economic behavior.","PeriodicalId":53924,"journal":{"name":"Journal of Tax Reform","volume":null,"pages":null},"PeriodicalIF":0.4,"publicationDate":"2023-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"67260094","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-01-01DOI: 10.15826/jtr.2023.9.1.129
Salah Salimian, M. M. Beknazar, Sattar Salimian
Tax as one of the main levers in the micro and macro sectors of the economy it has greatly accelerated the growth of the economy, and today there are fewer countries that use it as a pillar Economic stability does not accept. On the other hand time receipt of taxes for countries is very vital and the basis of government planning for all projects and especially their budgeting. Governments are looking for ways to collect their target tax from taxpayers at the lowest possible cost. Thus, the most important step to achieve this goal is for taxpayers to declare the actual amount of tax they have paid in tax return. This paper deals with modeling the game between taxpayers and National Tax Administration. The results showed that the equilibrium declared tax of taxpayers is a function of assessed due tax, the quality of assessment groups, the number of assessments and the parameter of taxpayers’ dishonesty. The taxpayers’ equilibrium declared tax is increasing relative to the quality of their assessment groups and decreasing relative to other assessment groups. With increase in the likelihood of dishonesty, the declared tax of larger taxpayers will increase and the declared tax of smaller taxpayers will decrease and vice versa. Furthermore, if the quality difference of two assessment groups is only vertical, then assessed due tax and the equilibrium declared taxes will be equal. Finally, increase in the number of assessment leads to increase in the declared tax of larger taxpayers and decrease in the declared tax of smaller taxpayers and vice versa.
{"title":"Modeling Tax Declaration Behavior and Quality of Tax Processing: A Game Theory Approach","authors":"Salah Salimian, M. M. Beknazar, Sattar Salimian","doi":"10.15826/jtr.2023.9.1.129","DOIUrl":"https://doi.org/10.15826/jtr.2023.9.1.129","url":null,"abstract":"Tax as one of the main levers in the micro and macro sectors of the economy it has greatly accelerated the growth of the economy, and today there are fewer countries that use it as a pillar Economic stability does not accept. On the other hand time receipt of taxes for countries is very vital and the basis of government planning for all projects and especially their budgeting. Governments are looking for ways to collect their target tax from taxpayers at the lowest possible cost. Thus, the most important step to achieve this goal is for taxpayers to declare the actual amount of tax they have paid in tax return. This paper deals with modeling the game between taxpayers and National Tax Administration. The results showed that the equilibrium declared tax of taxpayers is a function of assessed due tax, the quality of assessment groups, the number of assessments and the parameter of taxpayers’ dishonesty. The taxpayers’ equilibrium declared tax is increasing relative to the quality of their assessment groups and decreasing relative to other assessment groups. With increase in the likelihood of dishonesty, the declared tax of larger taxpayers will increase and the declared tax of smaller taxpayers will decrease and vice versa. Furthermore, if the quality difference of two assessment groups is only vertical, then assessed due tax and the equilibrium declared taxes will be equal. Finally, increase in the number of assessment leads to increase in the declared tax of larger taxpayers and decrease in the declared tax of smaller taxpayers and vice versa.","PeriodicalId":53924,"journal":{"name":"Journal of Tax Reform","volume":null,"pages":null},"PeriodicalIF":0.4,"publicationDate":"2023-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"67260287","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Tax can be imagined as a contribution by citizens to the elected government to carry out its functioning smoothly. Tax compliance is a problem that has existed for as long as taxes. Paying taxes is always a difficult process because it has a direct impact on the taxpayer’s residual income. As a result, everyone tries to avoid tax by tax management and tax evasion which is against the law. Tax evasion is among the main issues that the developing nations have been facing. Broader empirical research regarding individual income tax compliance behavior is scant in India. The present study aimed at exploring the determinants of taxpayer’s behavior in meeting personal tax obligation and examining the interrelationship between the factors and their contribution towards tax compliance from Indian context. The study is based on primary data collected through structure questionnaire from 1068 sample respondents covering nine districts of Odisha, a State of India by following stratified random sampling method. The exploratory factor analysis (EFA) and confirmatory factor analysis (CFA) identify three major factors i.e., economic, institutional, and social factors of tax compliance. Structural equation model has been adopted to achieve our objectives. It is evident from the results that variables under economic and institutional factors have a significant carry compared to variables under social factors. This also indicates about concern of individuals regarding their disposable income. Therefore, government should think of lowering tax rates and simultaneously keep on simplifying the tax compliance procedures and strengthen and expedite tax audit system.
{"title":"Determinants of Behavior of Payers of Personal Income Tax: An Empirical Study from Indian Context","authors":"Sanjeeb Kumar Dey, Shradhanjali Panda, Debabrata Sharma","doi":"10.15826/jtr.2023.9.2.141","DOIUrl":"https://doi.org/10.15826/jtr.2023.9.2.141","url":null,"abstract":"Tax can be imagined as a contribution by citizens to the elected government to carry out its functioning smoothly. Tax compliance is a problem that has existed for as long as taxes. Paying taxes is always a difficult process because it has a direct impact on the taxpayer’s residual income. As a result, everyone tries to avoid tax by tax management and tax evasion which is against the law. Tax evasion is among the main issues that the developing nations have been facing. Broader empirical research regarding individual income tax compliance behavior is scant in India. The present study aimed at exploring the determinants of taxpayer’s behavior in meeting personal tax obligation and examining the interrelationship between the factors and their contribution towards tax compliance from Indian context. The study is based on primary data collected through structure questionnaire from 1068 sample respondents covering nine districts of Odisha, a State of India by following stratified random sampling method. The exploratory factor analysis (EFA) and confirmatory factor analysis (CFA) identify three major factors i.e., economic, institutional, and social factors of tax compliance. Structural equation model has been adopted to achieve our objectives. It is evident from the results that variables under economic and institutional factors have a significant carry compared to variables under social factors. This also indicates about concern of individuals regarding their disposable income. Therefore, government should think of lowering tax rates and simultaneously keep on simplifying the tax compliance procedures and strengthen and expedite tax audit system.","PeriodicalId":53924,"journal":{"name":"Journal of Tax Reform","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2023-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135550928","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-01-01DOI: 10.15826/jtr.2023.9.2.136
Desislava G. Stoilova
This study aims to provide new evidence of the impact of total tax revenue and tax structure on economic growth in a sample of eleven European Union (EU) member states located in Central and Eastern Europe (CEE), namely Bulgaria, Croatia, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, and Slovenia. The methods used are description, comparison, synthesis, regression and correlation analysis of annual panel data for the period 2000-2021. The ordinary least squares (OLS) method is used to estimate the parameters of the regression models. The causal relationship between the variables is confirmed by the Granger causality test. The main results indicate that there is a significant negative effect of total government spending on economic growth rate, while the total tax revenue has a positive impact. These findings suggest low efficiency of public spending. The structure of tax systems does not seem to hinder economic growth, as both direct and indirect tax revenues show a positive growth-supporting effect. Only social security contributions are estimated to have a detrimental impact on economic growth. Value added tax and both income taxes (personal and corporate) are found to be growth-conductive, while property taxes and excise duties seem to have no significant impact on the growth rate. Based on the research findings it is obvious that government expenditure is not an effective tool for positive fiscal impact on the economy, so policymakers can support economic growth by decreasing the share of public spending in GDP or by increasing its efficiency. It is recommended to maintain the current ratio between direct and indirect tax revenue, while carefully considering changes to social security systems to promote sustainable and inclusive growth.
{"title":"The Impact of Tax Structure on Economic Growth: New Empirical Evidence from Central and Eastern Europe","authors":"Desislava G. Stoilova","doi":"10.15826/jtr.2023.9.2.136","DOIUrl":"https://doi.org/10.15826/jtr.2023.9.2.136","url":null,"abstract":"This study aims to provide new evidence of the impact of total tax revenue and tax structure on economic growth in a sample of eleven European Union (EU) member states located in Central and Eastern Europe (CEE), namely Bulgaria, Croatia, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, and Slovenia. The methods used are description, comparison, synthesis, regression and correlation analysis of annual panel data for the period 2000-2021. The ordinary least squares (OLS) method is used to estimate the parameters of the regression models. The causal relationship between the variables is confirmed by the Granger causality test. The main results indicate that there is a significant negative effect of total government spending on economic growth rate, while the total tax revenue has a positive impact. These findings suggest low efficiency of public spending. The structure of tax systems does not seem to hinder economic growth, as both direct and indirect tax revenues show a positive growth-supporting effect. Only social security contributions are estimated to have a detrimental impact on economic growth. Value added tax and both income taxes (personal and corporate) are found to be growth-conductive, while property taxes and excise duties seem to have no significant impact on the growth rate. Based on the research findings it is obvious that government expenditure is not an effective tool for positive fiscal impact on the economy, so policymakers can support economic growth by decreasing the share of public spending in GDP or by increasing its efficiency. It is recommended to maintain the current ratio between direct and indirect tax revenue, while carefully considering changes to social security systems to promote sustainable and inclusive growth.","PeriodicalId":53924,"journal":{"name":"Journal of Tax Reform","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2023-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135551262","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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