Pub Date : 2020-01-01DOI: 10.15826/jtr.2020.6.3.086
A. Pogorletskiy, F. Söllner
In this article, we shall see how pandemics of deadly diseases have changed tax systems over the past two millennia, each time leading to the emergence of new forms of taxation and tax administration. The purpose of the article is to prove that pandemics and the most notable innovations in tax policy are closely interrelated and that the consequences of the largest pandemics in the history of mankind are new approaches to the organization of national tax systems as well as the formation of interstate tax regulation. The lessons from history can be applied to the current corona crisis and may help us devise the appropriate anti-crisis tax policy. The study is based on the historical empirical-inductive method applied to reliable facts of the past related to pandemics and taxation. We trace the evolution of tax policy under the impact of the most significant pandemics and identify patterns of taxation and tax administration that are specific to their eras and are still relevant in the course of the pandemic COVID-19. Our analysis allows us to draw the following conclusions: (1) There is a historical link between pandemics and tax regulation. Many tax innovations originated in response to the consequences of large-scale epidemics of deadly diseases. (2) Many of the tax incentive tools used today in the fight against the corona crisis have already been used during previous pandemics so that we may learn from the experience of earlier times. (3) The COVID-19 pandemic can be expected to have several important consequences for taxation and public finance: innovations in tax administration with an emphasis on remote fiscal audits and digital control; innovations in the taxation of digital companies and their operations at the national and international level; possibly fundamental changes in the tax system of the European Union; and possibly a return of the inflation tax.
{"title":"Pandemics and Tax Innovations: What can we Learn from History?","authors":"A. Pogorletskiy, F. Söllner","doi":"10.15826/jtr.2020.6.3.086","DOIUrl":"https://doi.org/10.15826/jtr.2020.6.3.086","url":null,"abstract":"In this article, we shall see how pandemics of deadly diseases have changed tax systems over the past two millennia, each time leading to the emergence of new forms of taxation and tax administration. The purpose of the article is to prove that pandemics and the most notable innovations in tax policy are closely interrelated and that the consequences of the largest pandemics in the history of mankind are new approaches to the organization of national tax systems as well as the formation of interstate tax regulation. The lessons from history can be applied to the current corona crisis and may help us devise the appropriate anti-crisis tax policy. The study is based on the historical empirical-inductive method applied to reliable facts of the past related to pandemics and taxation. We trace the evolution of tax policy under the impact of the most significant pandemics and identify patterns of taxation and tax administration that are specific to their eras and are still relevant in the course of the pandemic COVID-19. Our analysis allows us to draw the following conclusions: (1) There is a historical link between pandemics and tax regulation. Many tax innovations originated in response to the consequences of large-scale epidemics of deadly diseases. (2) Many of the tax incentive tools used today in the fight against the corona crisis have already been used during previous pandemics so that we may learn from the experience of earlier times. (3) The COVID-19 pandemic can be expected to have several important consequences for taxation and public finance: innovations in tax administration with an emphasis on remote fiscal audits and digital control; innovations in the taxation of digital companies and their operations at the national and international level; possibly fundamental changes in the tax system of the European Union; and possibly a return of the inflation tax.","PeriodicalId":53924,"journal":{"name":"Journal of Tax Reform","volume":null,"pages":null},"PeriodicalIF":0.4,"publicationDate":"2020-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"67258811","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 : 2019-12-27DOI: 10.15826/JTR.2019.5.3.067
M. Kakaulina
One of the reasons behind declining budget revenues can be external migration. This article aims to describe the methodology for estimation of tax losses and revenues from international labor migration for specific types of taxes. Changes in personal income tax revenues are estimated by using the data on the number of labor emigrants (immigrants) for specific occupations, nominal gross monthly wage of employees in this occupation in Russia, standard child tax deductions and the corresponding personal income tax rate for residents (non-residents). Changes in VAT and excise tax revenues caused by the current trends in labor migration are estimated in accordance with the structure of household consumption. The amount of tax revenues (and losses) is calculated as the product of the sum of VAT and excise tax payments made by one member of a household per year when buying goods, works and services on the territory of Russia, and the number of emigrants (or immigrants). The research uses the data provided by Rosstat, Federal Tax Service of Russia and the Analytical Centre under the Government of the Russian Federation for 2012–2017. The conclusion is made that international migration has a negative impact on the tax revenues of the country’s consolidated state budget. Although, throughout the whole of the given period, the balance of additional revenues from VAT, excise taxes and the personal income tax (PIT) on earned income and budget losses from these taxes remained positive, in absolute terms, this balance decreased significantly. Trends in international labor migration affected the balance of tax losses and revenues. Therefore, the government’s attempts to target international labor migration by reforming the tax legislation seem quite reasonable: the upcoming tax reforms will include the introduction of the concept ‘centre of vital interests’ as the second criterion of residence and equalization of the PIT rate for tax residents and non-residents. The proposed methodology can thus prove to be an effective tool for the Federal Tax Service of Russia to estimate the resulting changes in tax revenues as well as other changes related to labor migration processes.
{"title":"Budget Tax Revenues and Losses from External Labor Migration in Russia","authors":"M. Kakaulina","doi":"10.15826/JTR.2019.5.3.067","DOIUrl":"https://doi.org/10.15826/JTR.2019.5.3.067","url":null,"abstract":"One of the reasons behind declining budget revenues can be external migration. This article aims to describe the methodology for estimation of tax losses and revenues from international labor migration for specific types of taxes. Changes in personal income tax revenues are estimated by using the data on the number of labor emigrants (immigrants) for specific occupations, nominal gross monthly wage of employees in this occupation in Russia, standard child tax deductions and the corresponding personal income tax rate for residents (non-residents). Changes in VAT and excise tax revenues caused by the current trends in labor migration are estimated in accordance with the structure of household consumption. The amount of tax revenues (and losses) is calculated as the product of the sum of VAT and excise tax payments made by one member of a household per year when buying goods, works and services on the territory of Russia, and the number of emigrants (or immigrants). The research uses the data provided by Rosstat, Federal Tax Service of Russia and the Analytical Centre under the Government of the Russian Federation for 2012–2017. The conclusion is made that international migration has a negative impact on the tax revenues of the country’s consolidated state budget. Although, throughout the whole of the given period, the balance of additional revenues from VAT, excise taxes and the personal income tax (PIT) on earned income and budget losses from these taxes remained positive, in absolute terms, this balance decreased significantly. Trends in international labor migration affected the balance of tax losses and revenues. Therefore, the government’s attempts to target international labor migration by reforming the tax legislation seem quite reasonable: the upcoming tax reforms will include the introduction of the concept ‘centre of vital interests’ as the second criterion of residence and equalization of the PIT rate for tax residents and non-residents. The proposed methodology can thus prove to be an effective tool for the Federal Tax Service of Russia to estimate the resulting changes in tax revenues as well as other changes related to labor migration processes.","PeriodicalId":53924,"journal":{"name":"Journal of Tax Reform","volume":null,"pages":null},"PeriodicalIF":0.4,"publicationDate":"2019-12-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"41890177","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 : 2019-12-27DOI: 10.15826/JTR.2019.5.3.071
A. Kireenko, E. N. Nevzorova, D. Fedotov
The article discusses the hypothesis that fiscal crime has some sector-specific characteristics, which tend to become more pronounced as new technologies emerge and develop. These characteristics should be taken into account when devising policies targeted at fighting tax evasion. To test this hypothesis, we analyzed quantitative (the level of economic crime in Russia in general and for different types of economic activity) and qualitative characteristics of crime (structure, dynamics and nature of crime). We also conducted analysis of the correlation between these indicators and the structure of costs and financial performance of organizations. The research relies on crime statistics, which reflect the scale of tax evasion better than financial statistics (since the latter are influenced by a large number of factors and are subject to significant change even within one year). Pearson’s and Spearman’s correlation coefficients were used for verification. Sectors of economy were ranked in descending order according to the corresponding economic crime rates and loss to gross value added in the sector. The findings show that unlike the cases of tax evasion, the number of economic crimes does not closely correlate with the structure of costs. Most tax crimes and corporate tax evasion in particular are recorded in sectors with lower labour costs, social security contributions and other prime costs but with higher depreciation of fixed assets (capital intensive industries). Thus, the results of this study contradict the findings of international scholars that shadow economy is larger in highest paying industries. It is shown that the sectors with higher losses are characterized by higher crime rates, that is, the loss in many cases is connected to tax evasion and related economic crime. The research has brought to light certain sector-specific characteristics of tax evasion, which means that these characteristics should be taken into account in governance and policy-making as well as in further research on this topic.
{"title":"Sector-Specific Characteristics of Tax Crime in Russia","authors":"A. Kireenko, E. N. Nevzorova, D. Fedotov","doi":"10.15826/JTR.2019.5.3.071","DOIUrl":"https://doi.org/10.15826/JTR.2019.5.3.071","url":null,"abstract":"The article discusses the hypothesis that fiscal crime has some sector-specific characteristics, which tend to become more pronounced as new technologies emerge and develop. These characteristics should be taken into account when devising policies targeted at fighting tax evasion. To test this hypothesis, we analyzed quantitative (the level of economic crime in Russia in general and for different types of economic activity) and qualitative characteristics of crime (structure, dynamics and nature of crime). We also conducted analysis of the correlation between these indicators and the structure of costs and financial performance of organizations. The research relies on crime statistics, which reflect the scale of tax evasion better than financial statistics (since the latter are influenced by a large number of factors and are subject to significant change even within one year). Pearson’s and Spearman’s correlation coefficients were used for verification. Sectors of economy were ranked in descending order according to the corresponding economic crime rates and loss to gross value added in the sector. The findings show that unlike the cases of tax evasion, the number of economic crimes does not closely correlate with the structure of costs. Most tax crimes and corporate tax evasion in particular are recorded in sectors with lower labour costs, social security contributions and other prime costs but with higher depreciation of fixed assets (capital intensive industries). Thus, the results of this study contradict the findings of international scholars that shadow economy is larger in highest paying industries. It is shown that the sectors with higher losses are characterized by higher crime rates, that is, the loss in many cases is connected to tax evasion and related economic crime. The research has brought to light certain sector-specific characteristics of tax evasion, which means that these characteristics should be taken into account in governance and policy-making as well as in further research on this topic.","PeriodicalId":53924,"journal":{"name":"Journal of Tax Reform","volume":null,"pages":null},"PeriodicalIF":0.4,"publicationDate":"2019-12-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48127251","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 : 2019-12-27DOI: 10.15826/JTR.2019.5.3.069
I. Loukianova, Maria A. Shkliarova, S. Vysotsky
The article discusses classical and modern macroeconomic models of interaction of fiscal and monetary policies in Belarus. The hypothesis of this research is that the interaction of fiscal and monetary policies has a synergistic effect on economic growth and that at certain stages, one of these policies prevails over the other. This hypothesis was tested with the help of an IS-LM model, which was used to investigate the joint effects of monetary and fiscal policies on business activity in Belarus. A Markov switching model was developed in Eviews software to analyze the interaction between these policies. Regression dependences of the average tax burden (including the burden imposed by social security contributions) and GDP, investment and the refinancing rate were built by using Excel software. To solve the IS-LM model, the value of autonomous consumption was computed with the help of the adjusted value of the average propensity to consume. It was found that autonomous consumption is comparable with the budget of subsistence minimum in Belarus. The share of government spending in the GDP structure was on average 35.01%. The comparison of gross savings and investment showed that in the majority of periods, gross savings insignificantly exceeded the amount of investment, that is, the available funds were used for consumer lending rather than for investment. Analysis of the Markov switching model has led us to the conclusion that from the first quarter 2005 until the fourth quarter of 2009, the fiscal policy in Belarus was in the active regime. The passive fiscal policy regime was observed in the period between the first quarter of 2010 and the first quarter of 2019. In this period, a rise in the public debt was accompanied by an increase in the budget surplus. In the second quarter of 2019, there was a transition to a more active fiscal policy, which points to the need to intensify tax reforms.
{"title":"Modelling of Fiscal and Monetary Policy Interactions in the Republic of Belarus","authors":"I. Loukianova, Maria A. Shkliarova, S. Vysotsky","doi":"10.15826/JTR.2019.5.3.069","DOIUrl":"https://doi.org/10.15826/JTR.2019.5.3.069","url":null,"abstract":"The article discusses classical and modern macroeconomic models of interaction of fiscal and monetary policies in Belarus. The hypothesis of this research is that the interaction of fiscal and monetary policies has a synergistic effect on economic growth and that at certain stages, one of these policies prevails over the other. This hypothesis was tested with the help of an IS-LM model, which was used to investigate the joint effects of monetary and fiscal policies on business activity in Belarus. A Markov switching model was developed in Eviews software to analyze the interaction between these policies. Regression dependences of the average tax burden (including the burden imposed by social security contributions) and GDP, investment and the refinancing rate were built by using Excel software. To solve the IS-LM model, the value of autonomous consumption was computed with the help of the adjusted value of the average propensity to consume. It was found that autonomous consumption is comparable with the budget of subsistence minimum in Belarus. The share of government spending in the GDP structure was on average 35.01%. The comparison of gross savings and investment showed that in the majority of periods, gross savings insignificantly exceeded the amount of investment, that is, the available funds were used for consumer lending rather than for investment. Analysis of the Markov switching model has led us to the conclusion that from the first quarter 2005 until the fourth quarter of 2009, the fiscal policy in Belarus was in the active regime. The passive fiscal policy regime was observed in the period between the first quarter of 2010 and the first quarter of 2019. In this period, a rise in the public debt was accompanied by an increase in the budget surplus. In the second quarter of 2019, there was a transition to a more active fiscal policy, which points to the need to intensify tax reforms.","PeriodicalId":53924,"journal":{"name":"Journal of Tax Reform","volume":null,"pages":null},"PeriodicalIF":0.4,"publicationDate":"2019-12-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47819513","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 : 2019-12-27DOI: 10.15826/JTR.2019.5.3.068
N. Yaroshevych, S. Cherkasova, T. Kalaitan
The article discusses the effects of fiscal instruments used to stimulate the development of small business in Ukraine and the hypothesis that the inconsistencies inherent in these instruments prevent them from achieving the desired outcomes. To test this hypothesis, the authors estimated the percentage of small businesses covered by the simplified tax scheme and analyzed such fiscal instruments as the simplified tax scheme, various types of debt financing and taxation of debt financing. The authors used the data on the amount and dynamics of repayable financial assistance to estimate the scale of the phenomenon of corporate split-ups. The latter might be caused by the interest of large and medium-sized companies in accessing small business tax preferences. To calculate the amount of repayable financial assistance the authors propose to adjust the indicator of other current liabilities for the following indicators: other current accounts payable; interest incomes of resident banks; interest incomes of non-resident banks from their lending transactions in Ukraine; commission incomes of resident banks; and the total amount of corporate bonds. The analysis relies on the data of the State Statistics Service of Ukraine on activity of companies and the data of the National Bank of Ukraine on the country’s banking system in 2012–2017. The results of the analysis have confirmed the initial hypothesis about the contradictory effects of fiscal instruments: 1) In the given period, from 22% to 38% of small businesses did not have access to the benefits of the simplified tax system due to the inadequacy of the criteria for defining the size of business. 2) The taxation norms discriminated against small businesses seeking to use specific instruments of debt financing: instead of stimulating the development of start-ups, these fiscal instruments encouraged large and medium-sized companies to split into smaller units. 3) What distinguishes Ukraine from other countries is the wide use of repayable financial assistance by small businesses to attract funds. Calculations have shown that the share of repayable financial assistance among other available instruments of debt financing in the given period exceeded 28%. Thus, the findings indicate that further improvements of small business taxation are necessary.
{"title":"Inconsistencies of small business fiscal stimulation in Ukraine","authors":"N. Yaroshevych, S. Cherkasova, T. Kalaitan","doi":"10.15826/JTR.2019.5.3.068","DOIUrl":"https://doi.org/10.15826/JTR.2019.5.3.068","url":null,"abstract":"The article discusses the effects of fiscal instruments used to stimulate the development of small business in Ukraine and the hypothesis that the inconsistencies inherent in these instruments prevent them from achieving the desired outcomes. To test this hypothesis, the authors estimated the percentage of small businesses covered by the simplified tax scheme and analyzed such fiscal instruments as the simplified tax scheme, various types of debt financing and taxation of debt financing. The authors used the data on the amount and dynamics of repayable financial assistance to estimate the scale of the phenomenon of corporate split-ups. The latter might be caused by the interest of large and medium-sized companies in accessing small business tax preferences. To calculate the amount of repayable financial assistance the authors propose to adjust the indicator of other current liabilities for the following indicators: other current accounts payable; interest incomes of resident banks; interest incomes of non-resident banks from their lending transactions in Ukraine; commission incomes of resident banks; and the total amount of corporate bonds. The analysis relies on the data of the State Statistics Service of Ukraine on activity of companies and the data of the National Bank of Ukraine on the country’s banking system in 2012–2017. The results of the analysis have confirmed the initial hypothesis about the contradictory effects of fiscal instruments: 1) In the given period, from 22% to 38% of small businesses did not have access to the benefits of the simplified tax system due to the inadequacy of the criteria for defining the size of business. 2) The taxation norms discriminated against small businesses seeking to use specific instruments of debt financing: instead of stimulating the development of start-ups, these fiscal instruments encouraged large and medium-sized companies to split into smaller units. 3) What distinguishes Ukraine from other countries is the wide use of repayable financial assistance by small businesses to attract funds. Calculations have shown that the share of repayable financial assistance among other available instruments of debt financing in the given period exceeded 28%. Thus, the findings indicate that further improvements of small business taxation are necessary.","PeriodicalId":53924,"journal":{"name":"Journal of Tax Reform","volume":null,"pages":null},"PeriodicalIF":0.4,"publicationDate":"2019-12-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49144614","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 : 2019-12-27DOI: 10.15826/JTR.2019.5.3.070
Stoyan Tanchev, I. Todorov
The study analyzes the long-run and short-run tax buoyancies of Bulgaria and their relationship with Bulgaria’s economic growth. The buoyancy measures the response of tax revenue to changes in economic growth. The buoyancy indicates whether collectability of the tax on income, profit, and consumption increases. The object of this study is the collectability of aggregate tax revenues and of the revenues from different types of taxes – value added tax, personal income tax, corporate tax and social security contributions in Bulgaria. The subject of the study is the relationship of different tax revenues with economic growth. The research methods employed are the fully modified least squares (FMOLS) and autoregressive distributed lag model (ARDL). The research covers the period from the first quarter of 1999 to the second quarter of 2017 and uses the Eurostat data (78 observations). The study aims to show which type of revenues (from direct or from indirect taxes) is more important for Bulgaria’s state budget. It is shown that the buoyancies of aggregate tax revenue, personal income tax and social security contributions significantly differ from one another in the long-run. The buoyancies of the value-added tax and the corporate tax are above one in the long run. In the short-run the buoyancy of the aggregate tax revenues, the corporate tax, the income tax and the social security contributions are different from one. The short-run buoyancy of VAT exceeds one, hence dynamics of VAT revenues is sustainable. The collectability of the aggregate tax revenue, personal income tax and social security contributions has increased neither in the long run nor in the short run. It is therefore recommended that inefficient taxes, whose collectability does not increase, be reformed. For citation Tanchev S., Todorov I. Tax Buoyancy and Economic Growth: Empirical Evidence of Bulgaria. Journal of Tax Reform . 2019;5(3):236–248. DOI: 10.15826/jtr.2019.5.3.070 Article info Received October 18, 2019 ; Revised November 20, 2019 ; Accepted December 3, 2019
{"title":"Tax Buoyancy and Economic Growth: Empirical Evidence of Bulgaria","authors":"Stoyan Tanchev, I. Todorov","doi":"10.15826/JTR.2019.5.3.070","DOIUrl":"https://doi.org/10.15826/JTR.2019.5.3.070","url":null,"abstract":"The study analyzes the long-run and short-run tax buoyancies of Bulgaria and their relationship with Bulgaria’s economic growth. The buoyancy measures the response of tax revenue to changes in economic growth. The buoyancy indicates whether collectability of the tax on income, profit, and consumption increases. The object of this study is the collectability of aggregate tax revenues and of the revenues from different types of taxes – value added tax, personal income tax, corporate tax and social security contributions in Bulgaria. The subject of the study is the relationship of different tax revenues with economic growth. The research methods employed are the fully modified least squares (FMOLS) and autoregressive distributed lag model (ARDL). The research covers the period from the first quarter of 1999 to the second quarter of 2017 and uses the Eurostat data (78 observations). The study aims to show which type of revenues (from direct or from indirect taxes) is more important for Bulgaria’s state budget. It is shown that the buoyancies of aggregate tax revenue, personal income tax and social security contributions significantly differ from one another in the long-run. The buoyancies of the value-added tax and the corporate tax are above one in the long run. In the short-run the buoyancy of the aggregate tax revenues, the corporate tax, the income tax and the social security contributions are different from one. The short-run buoyancy of VAT exceeds one, hence dynamics of VAT revenues is sustainable. The collectability of the aggregate tax revenue, personal income tax and social security contributions has increased neither in the long run nor in the short run. It is therefore recommended that inefficient taxes, whose collectability does not increase, be reformed. For citation Tanchev S., Todorov I. Tax Buoyancy and Economic Growth: Empirical Evidence of Bulgaria. Journal of Tax Reform . 2019;5(3):236–248. DOI: 10.15826/jtr.2019.5.3.070 Article info Received October 18, 2019 ; Revised November 20, 2019 ; Accepted December 3, 2019","PeriodicalId":53924,"journal":{"name":"Journal of Tax Reform","volume":null,"pages":null},"PeriodicalIF":0.4,"publicationDate":"2019-12-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48613103","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 : 2019-08-31DOI: 10.15826/jtr.2019.5.2.066
W. Dehua, Wu Han
The article analyzes the impact of the 2009 VAT reform in China on investment and employment. This reform was a key step in improving the VAT tax system in the long term, and one of the key measures to structurally reduce taxes in response to the global financial crisis in the short term. The data for this analysis were provided by the “National Tax Survey” jointly conducted by the Chinese Ministry of Finance and State Administration of Taxation. We measured the impact of the VAT reform using the difference-in-differences method: we compared the difference between the experimental group and the control group before and after the reform. There were two kinds of organizations in our control group. The first kind consisted of enterprises that did not pay the VAT and small-scale VAT-paying enterprises that did not subtract the input taxes for fixed assets investment. The second kind comprised organizations that had not been included in pilot experiments before 2009 and foreign-invested corporations that were allowed to deduct the input tax for fixed asset investment before and after 2009. The experimental group consisted of ordinary VAT-paying enterprises that had not been included in the pilot study before 2009 and were affected by the 2009 reform. Our estimations lead us to the conclusion that the VAT tax reform of 2009 significantly enhanced the companies’ physical investment in machinery and equipment, but had no impact on employment. When comparing physical investment and employment in 2007 with 2008 and 2009, we detected a downward trend, which may reflect the impact of the global financial crisis on Chinese business. The total corporate profits and profit margins have little impact on business investment and employment, while the asset size and the tax burden show a significant positive impact. Thus, the reform significantly increased business investment in fixed assets, but had no obvious effect on employment. For citation Wang Dehua, Wu Han. The Impact of 2009 VAT Reform on Enterprise Investment and Employment – Empirical Analysis Based on Chinese Tax Survey Data. Journal of Tax Reform . 2019;5(2):166–176. DOI: 10.15826/jtr.2019.5.2.066 Article info Received May 17, 2019 ; accepted August 11, 2019
{"title":"The Impact of 2009 VAT Reform on Enterprise Investment and Employment – Empirical Analysis Based on Chinese Tax Survey Data","authors":"W. Dehua, Wu Han","doi":"10.15826/jtr.2019.5.2.066","DOIUrl":"https://doi.org/10.15826/jtr.2019.5.2.066","url":null,"abstract":"The article analyzes the impact of the 2009 VAT reform in China on investment and employment. This reform was a key step in improving the VAT tax system in the long term, and one of the key measures to structurally reduce taxes in response to the global financial crisis in the short term. The data for this analysis were provided by the “National Tax Survey” jointly conducted by the Chinese Ministry of Finance and State Administration of Taxation. We measured the impact of the VAT reform using the difference-in-differences method: we compared the difference between the experimental group and the control group before and after the reform. There were two kinds of organizations in our control group. The first kind consisted of enterprises that did not pay the VAT and small-scale VAT-paying enterprises that did not subtract the input taxes for fixed assets investment. The second kind comprised organizations that had not been included in pilot experiments before 2009 and foreign-invested corporations that were allowed to deduct the input tax for fixed asset investment before and after 2009. The experimental group consisted of ordinary VAT-paying enterprises that had not been included in the pilot study before 2009 and were affected by the 2009 reform. Our estimations lead us to the conclusion that the VAT tax reform of 2009 significantly enhanced the companies’ physical investment in machinery and equipment, but had no impact on employment. When comparing physical investment and employment in 2007 with 2008 and 2009, we detected a downward trend, which may reflect the impact of the global financial crisis on Chinese business. The total corporate profits and profit margins have little impact on business investment and employment, while the asset size and the tax burden show a significant positive impact. Thus, the reform significantly increased business investment in fixed assets, but had no obvious effect on employment. For citation Wang Dehua, Wu Han. The Impact of 2009 VAT Reform on Enterprise Investment and Employment – Empirical Analysis Based on Chinese Tax Survey Data. Journal of Tax Reform . 2019;5(2):166–176. DOI: 10.15826/jtr.2019.5.2.066 Article info Received May 17, 2019 ; accepted August 11, 2019","PeriodicalId":53924,"journal":{"name":"Journal of Tax Reform","volume":null,"pages":null},"PeriodicalIF":0.4,"publicationDate":"2019-08-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48324878","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 : 2019-08-31DOI: 10.15826/jtr.2019.5.2.065
L. Polezharova
This article describes ways to enhance the efficiency of anti-tax base erosion measures aimed at preventing transnational corporations (TNCs) from shifting their profits from home countries to lower-tax jurisdictions. The research methodology comprises a set of mathematical models applied for a comprehensive analysis of tax planning methods used by TNCs and the counter-methods used by national governments. The models with postulated equilibrium consider tripartite financial structures (consisting of a parent company, a subsidiary in a loyal jurisdiction and an affiliate in an offshore jurisdiction) based on the principle of economic equilibrium in the distribution of incomes of different jurisdictions. The models are parametrized by using the data on tax regimes in different jurisdictions. The computational experiment focused on the tax regimes of a parent jurisdiction (Russian Federation), a typical loyal jurisdiction (Laos) and a typical offshore jurisdiction (British Virgin Islands). Thus, we considered the most important cases in international taxation regarding TNCs’ economic interests and the national welfare of the parent jurisdiction. The experiment tested the efficiency of different methods of fiscal regulation of international income and capital flows and showed that although the rules of controlled transactions are considered crucial for countering tax planning, they fail to bring the desired results in contemporary economic reality characterized by expanded international network of financial structures and accelerated growth of digital transactions. Based on our research findings, we formulated the following recommendations. The governments of parent jurisdictions are recommended to extend the rules of controlled transactions and controlled foreign corporations not only to offshores but also to loyal jurisdictions. For the Russian government, it may be effective to test and adopt the rules of secondary adjustments in combination with the rules of controlled transactions and controlled foreign corporations, to lower the rate of the tax on foreign dividends and to make the unreturned foreign dividends exempt from the additional tax should they be repatriated to Russia. Enhanced international cooperation in this sphere can maximize the efficiency of these measures. For citation Polezharova L. V. Improving the Efficiency of Anti-Tax Base Erosion Regimes through Tax Modelling. Journal of Tax Reform . 2019;5(2):148–165. DOI: 10.15826/jtr.2019.5.2.065 Article info Received June 28, 2019 ; accepted August 6, 2019
本文介绍了提高反税基侵蚀措施效率的方法，这些措施旨在防止跨国公司(TNCs)将其利润从母国转移到低税收管辖区。研究方法包括一套数学模型，用于全面分析跨国公司使用的税收筹划方法和各国政府使用的反方法。假设均衡模型基于不同司法管辖区收入分配的经济均衡原则，考虑了三方金融结构(由母公司、忠实司法管辖区的子公司和离岸司法管辖区的子公司组成)。模型通过使用不同司法管辖区税收制度的数据进行参数化。计算实验的重点是母国(俄罗斯联邦)、典型忠诚国(老挝)和典型离岸国(英属维尔京群岛)的税收制度。因此，我们考虑了有关跨国公司经济利益和母管辖区国家福利的国际税收中最重要的案例。该实验测试了对国际收入和资本流动的不同财政监管方法的效率，并表明，尽管受控交易规则被认为对打击税收筹划至关重要，但在以扩大的国际金融结构网络和加速增长的数字交易为特征的当代经济现实中，它们未能带来预期的结果。根据我们的研究结果，我们制定了以下建议。建议母公司管辖区的政府将受控交易和受控外国公司的规则不仅扩展到海外，而且扩展到忠诚的管辖区。对于俄罗斯政府来说，结合受控交易规则和受控外国公司规则，测试并采用二次调整规则，降低外国股息的税率，对未返还的外国股息如果汇回俄罗斯免征附加税，可能是有效的。加强这一领域的国际合作可以最大限度地提高这些措施的效率。Polezharova L. V.通过税收模型提高反税基侵蚀制度的效率。税收改革杂志。2019; 5(2): 148 - 165。DOI: 10.15826/jtr.2019.5.2.0652019年8月6日录用
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Pub Date : 2019-08-31DOI: 10.15826/jtr.2019.5.2.064
E. Balatsky, N. Ekimova
The “turnpike hypothesis” proposed in this article suggests that the trajectory of GDP growth rates is a “turnpike”, which attracts tax revenues of any type. A significant deviation of the rates of tax revenue growth from the turnpike means that this tax has grown unresponsive to the dynamics of the global tax base – GDP. To test this hypothesis, the authors introduce the indicators of surplus return and volatility of tax revenues, which leads them to narrowing the definitions of such terms as budget orientation and efficiency of taxes. To analyze the behaviour of economic agents, the authors construct econometric dependencies of three indirect taxes (VAT, customs duties and excise taxes) on the tax rate (tax burden), GDP and the population income. For the VAT, the tax burden was its nominal rate; for excise taxes, the share of excise taxes in the retail turnover; for customs duties, the share of customs duties in the foreign trade turnover. The resulting models were used to calculate the elasticity of tax revenues, GDP and population incomes with respect to the tax burden, which is equivalent to the analytical expression of the way the three participants of the economic system – state (public budget), producers (business) and consumers (population) – react to the tax burden. To analyze the analytical coefficients and econometric models, the authors used the statistical data of Rosstat for Russia and of the OECD for the USA for the period between 1995 and 2017. The calculations show that the Russian and American tax systems contain taxes that are “insensitive” to economic growth. In Russia, these include the natural resource extraction tax, customs duties and contributions to extra-budgetary funds, and in the USA, excise taxes, property tax and customs duties. The study shows that the Russian economic crises in 2008 and 2014 had a remedial effect on the country’s tax system and helped it get closer to the turnpike of economic growth. The model calculations of the three kinds of elasticity showed that an increase in the VAT tax rate reduced the activity of the three participants of the economic system while an increase in the excise or customs duty burden, on the contrary, enhanced their activity. The conclusion is made that the turnpike hypothesis is confirmed for the majority of taxes both in Russia and the USA. It is also shown that those taxes for which the hypothesis is confirmed only partially are in urgent need of reformation. For citation Balatsky E. V., Ekimova N. A. The Impact of Tax Reforms on the Behaviour of Economic Agents (Indirect Taxation in Russia and the USA). Journal of Tax Reform . 2019;5(2):129–147. DOI: 10.15826/jtr.2019.5.2.064 Article info Received June 24, 2019 ; accepted July 21, 2019
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Pub Date : 2019-08-31DOI: 10.15826/jtr.2019.5.2.063
Givi Bedianashvili, Y. B. Ivanov, T. Paientko
The Georgian and Ukrainian tax systems both emerged after the collapse of the USSR, yet the tax reforms in the two countries pursued different trajectories and produced different outcomes. The article systematizes and compares the results of the tax reforms in Ukraine and Georgia. The study applies qualitative methods for historical analysis, for periodization of the reforms and for classifying their key priorities and the factors that influenced them. Quantitative methods are applied to compare the tax burden in Ukraine, Georgia and OECD countries. The success and failure of the tax reforms was measured by the index of economic freedom (including its component – the index of tax burden). The first hypothesis suggested that a reduction in the tax burden had a positive impact on the indicators of economic freedom; the second hypothesis stated that a reduction in the tax burden affected fiscal freedom but did not affect the index of economic freedom. Regression dependences of the average tax burden (including the tax burden resulting from social security contributions) and the index of economic freedom (including the index of tax burden) were built in the R environment. The regression analysis confirmed the first hypothesis for Ukraine and the second, for Georgia. This result can be explained by the fact that, unlike Ukraine, the Georgian tax reforms focused on institutional changes, which determined their success. In 1996–2018, Georgia rose in the ranking of economic freedom and joined the group of economically free countries. Moreover, this country has been steadily improving its position in the ranking. Ukraine, on the contrary, has remained in the group of economically unfree countries. Due to the unbalanced reforms and insufficient structural changes, the country’s government failed to ensure the desired effect from the tax burden reduction. For citation Bedianashvili G., Ivanov Yu. B., Paientko T. V. Tax Reforms in Ukraine and Georgia: Changing Priorities. Journal of Tax Reform . 2019;5(2):107–128. DOI: 10.15826/jtr.2019.5.2.063 Article info Received June 25, 2019 ; accepted July 27, 2019
{"title":"Tax Reforms in Ukraine and Georgia: Changing Priorities","authors":"Givi Bedianashvili, Y. B. Ivanov, T. Paientko","doi":"10.15826/jtr.2019.5.2.063","DOIUrl":"https://doi.org/10.15826/jtr.2019.5.2.063","url":null,"abstract":"The Georgian and Ukrainian tax systems both emerged after the collapse of the USSR, yet the tax reforms in the two countries pursued different trajectories and produced different outcomes. The article systematizes and compares the results of the tax reforms in Ukraine and Georgia. The study applies qualitative methods for historical analysis, for periodization of the reforms and for classifying their key priorities and the factors that influenced them. Quantitative methods are applied to compare the tax burden in Ukraine, Georgia and OECD countries. The success and failure of the tax reforms was measured by the index of economic freedom (including its component – the index of tax burden). The first hypothesis suggested that a reduction in the tax burden had a positive impact on the indicators of economic freedom; the second hypothesis stated that a reduction in the tax burden affected fiscal freedom but did not affect the index of economic freedom. Regression dependences of the average tax burden (including the tax burden resulting from social security contributions) and the index of economic freedom (including the index of tax burden) were built in the R environment. The regression analysis confirmed the first hypothesis for Ukraine and the second, for Georgia. This result can be explained by the fact that, unlike Ukraine, the Georgian tax reforms focused on institutional changes, which determined their success. In 1996–2018, Georgia rose in the ranking of economic freedom and joined the group of economically free countries. Moreover, this country has been steadily improving its position in the ranking. Ukraine, on the contrary, has remained in the group of economically unfree countries. Due to the unbalanced reforms and insufficient structural changes, the country’s government failed to ensure the desired effect from the tax burden reduction. For citation Bedianashvili G., Ivanov Yu. B., Paientko T. V. Tax Reforms in Ukraine and Georgia: Changing Priorities. Journal of Tax Reform . 2019;5(2):107–128. DOI: 10.15826/jtr.2019.5.2.063 Article info Received June 25, 2019 ; accepted July 27, 2019","PeriodicalId":53924,"journal":{"name":"Journal of Tax Reform","volume":null,"pages":null},"PeriodicalIF":0.4,"publicationDate":"2019-08-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48633462","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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