Effects of zero rating value added tax on government revenue in Namibia

2015 ◽  
Vol 6 (4) ◽  
pp. 343-355 ◽  
Author(s):  
Ojijo Odhiambo ◽  
John E. Odada
Keyword(s):  
Aggregate Demand ◽  
National Income ◽  
Value Added ◽  
Disposable Income ◽  
Government Revenue ◽  
Content Type ◽  
Goods And Services ◽  
Marginal Propensity To Consume ◽  
Long Run ◽  
Marginal Propensity

Purpose – The Government of Namibia has traditionally used fiscal (especially tax) policy as an instrument for annual budget formulation. Marginal tax rates for profits and various income brackets have been changed back and forth in response to changes in economic conditions. However, to date, no attempt has been made to evaluate the effectiveness of these reforms in achieving the broad national economic goals, in general, and the potential effects on government revenue in the short, medium and long-run periods, in particular. The purpose of this paper is to fill this information gap by analysing the implication of the 2008 zero-rating of value added tax (VAT) on basic commodities for aggregate demand and government revenue. Design/methodology/approach – The study uses an analytical framework based on economic theory which posits that in an open economy, which trades with the rest of the world, aggregate demand for goods and services is made up of consumption demand, investment demand, government demand and net exports and that real sector equilibrium is attained when aggregate supply of goods and services is equal to aggregate demand for goods and services. Findings – Using the Namibia Household Income and Expenditure Survey results, the annual loss in government revenue attributable to this policy is, ceteris paribus, estimated to be N$310.4 million. With a marginal propensity to consume out of disposable income of 0.89, total expenditure by households on goods and services is likely to increase by N$276.3 million per annum. In the medium-to-long-run, national income will have increased by N$303.9 million per annum. Taxes which are responsive to changes in the level of national income will have increased by N$85.7 million, compensating for just over one quarter of the estimated loss in government revenue of N$310.4 million. Research limitations/implications – The study has used a partial equilibrium model as opposed to computable general equilibrium model, which provides a consistent framework that meets most of the sectoral and institutional data requirements for the simple reason that a social accounting matrix which can be used readily to connect data from different sources, such as national accounts and household surveys and would thus have been ideal model for analysing the impacts of the VAT tax reform has not been developed for Namibia. Practical implications – The paper provides a number of practical policy options available for government including, but not limited to, increasing direct taxes, VAT rate on specific (luxury) goods and services and statutory VAT rate on all other commodities not zero-rated, other taxes such as taxes; and borrowing from external sources. Social implications – It is established that zero-rating VAT on all the basic commodities in 2008 reduces the VAT paid by all Namibian households by N$310.4 million per year, which represents the annual increase in the disposable income of all households. And with a marginal propensity to consume out of disposable income of 0.89, total expenditure by households on goods and services will increase by N$276.3 million per year. Originality/value – This paper presents the first attempt at evaluating the effectiveness of tax (VAT) policy reforms in Namibia in achieving the broad national economic goals, in general, and the potential effects on government revenue in the short, medium and long-run periods, in particular.

Government is unlikely to overhaul Poland’s tax regime

2021 ◽  
Keyword(s):  
Value Added ◽  
Disposable Income ◽  
Policy Preference ◽  
Corporate Taxes ◽  
Value Added Tax ◽  
Alternative Source ◽  
Content Type ◽  
Goods And Services ◽  
Indirect Taxes ◽  
The Government

Significance This continues the policy preference -- out of line with Poland’s peers -- for indirect taxes on goods and services, including a relatively high value-added tax (VAT) rate. The government says the sugar tax aims to curb rising obesity, but critics suspect it is a new way of raising revenue. Impacts Corporate taxes could be raised as an alternative source of revenue. Left unaddressed, the regressive trend in taxes and rising inequality may create an opening for the leftist Spring and Together parties. If UK taxes rise post-pandemic, the relative fall in disposable income could encourage Polish immigrants to return to Poland.

Does tax policy fit in the portfolio of COVID-19 responses?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Kerrie Sadiq ◽  
Richard Krever
Keyword(s):  
Tax Policy ◽  
Value Added ◽  
Mitigation Strategies ◽  
Income Support ◽  
Policy Reforms ◽  
Content Type ◽  
Goods And Services ◽  
Policy Responses ◽  
Tax Regimes ◽  
The Uk

Purpose Tax policymakers are currently navigating a path through a delicate dialectic of macro- and micro-level policy responses to the economic dislocation of the COVID-19 pandemic. The purpose of this paper is to examine initial tax measures that are aimed at helping taxpayers needing liquidity, solvency and income support. Design/methodology/approach This study undertakes a review of key tax policy responses of six jurisdictions across the globe that have similar tax regimes and virus mitigation strategies (albeit with different outcomes). Key initiatives implemented from February to April 2020 by Australia, Canada, New Zealand, Singapore, South Africa and the UK are examined. Findings This study indicates that tax concessions are a crude and mostly ineffective way of assisting individuals and enterprises in difficulty. In the longer term, if the crisis prompts desirable reforms such as extending the recognition of tax losses, the income tax system will emerge fairer and more efficient. Practical implications An investigation of the short-term reforms announced relating to asset write-offs, tax deferral, tax losses and goods and services tax/value-added tax rates in light of the liquidity, income support and stimulus objectives shows that in some cases the policies may have been misguided. The findings can be used by policymakers as the basis for designing better targeted alternative non-tax responses. Originality/value Jurisdictional responses to tax policy reforms during a modern period of significant economic dislocation have yet to be documented in the literature. Specifically, this paper highlights the limitations of tax policy initiatives as a response to financial hardship.

scholarly journals Agro-industrialisation and financial intermediation in Nigeria

2020 ◽  
Vol 11 (3) ◽  
pp. 443-456 ◽  
Author(s):  
Ngozi Adeleye ◽  
Evans Osabuohien ◽  
Simplice Asongu
Keyword(s):  
Agricultural Sector ◽  
Explanatory Power ◽  
Value Added ◽  
Annual Data ◽  
Industrial Output ◽  
Industrial Growth ◽  
Content Type ◽  
Long Run ◽  
The Government

PurposeThe study aims to analyse the role of finance in the agro-industrialisation nexus in Nigeria using annual data on manufacturing value added, agricultural value added and volume of finance availed to the agricultural sector from 1981 to 2015.Design/methodology/approachTo establish the presence of a long-run relationship, the error correction model and bounds cointegration techniques are employed. Likewise, the model is augmented to test whether the associated relationship between industrial output and agricultural output depends on access to finance by farmers with the inclusion of an interaction term.FindingsSome salient contributions to the literature are as follows: agriculture and finance are strong and positive predictors of industrialisation in the long run; in the short run, past realisations of industrial output and finance have significant asymmetric effects on industrial output; the explanatory power of agriculture decreases with the growth of the financial system; and the long-run results validate the role of finance in the agro-industrialisation nexus.Originality/valueGiven these findings, achieving growth in the agricultural sector that will induce desired industrialisation should be prioritised by the government through agencies such as the central bank, financial intermediaries and other stakeholders with a view to making agricultural financing a major concern for sustainable domestic consumption and industrial growth.

Impacts of remittances on financial development

2020 ◽  
Vol 47 (3) ◽  
pp. 467-477
Author(s):  
SeyedSoroosh Azizi
Keyword(s):  
Developing Countries ◽  
Interest Rates ◽  
Financial Development ◽  
Positive Impact ◽  
National Income ◽  
Fixed Effect Model ◽  
Content Type ◽  
International Remittances ◽  
Long Run ◽  
Percent Increase

PurposeThe purpose of this paper is to examine the impacts of international remittances on financial development in developing countries.Design/methodology/approachThe focus is on a panel of 124 developing countries for the period 1990–2015. The empirical evidence is based on the instrumental variable-fixed effect model.FindingsResults obtained in this study indicate that a 10 percent increase in the remittance to GDP ratio leads to 1.7 percent increase in domestic credit to private sector, 1.9 percent increase in bank credit, 1.2 percent increase in bank deposit, and 0.8 percent increase in liquid liabilities. The positive impact of remittances on financial development in developing countries is particularly important because financial development fosters long-run growth and reduces poverty.Originality/valueTo address the endogeneity of remittances, the study estimates bilateral remittances and use them to create weighted gross national income per capita and real interest rates of remittance-sending countries. To the best of the author’s knowledge, this is the first study to assess the endogeneity of remittances in this way.

Strategic benchmarking of service pricing based on the value added

2016 ◽  
Vol 23 (4) ◽  
pp. 754-767 ◽  
Author(s):  
Carlos Renato Trento ◽  
Timóteo Stüker ◽  
Giancarlo Medeiros Pereira ◽  
Miriam Borchardt ◽  
Cláudia V. Viegas
Keyword(s):  
Value Added ◽  
Spare Parts ◽  
Pricing Policy ◽  
Content Type ◽  
Customer Expectations ◽  
Goods And Services ◽  
Case Research ◽  
Service Pricing ◽  
Research Questions ◽  
New Goods

Purpose – The purpose of this paper is to investigate opportunities to move benchmarking studies toward a strategic level. The authors benchmarked how service prices are defined based on the value added for the customer. Design/methodology/approach – A multi-case research investigated how manufacturers can increase their service revenues; how corporate reputation can be analyzed to enhance financial and market performance; how customer satisfaction and price acceptance are related; and how benchmark studies can move to a more strategic level based on a conjoint analysis of value and price. Findings – Price’s benchmarking studies must combine the customers’ value demands; the customer expectations associated to each value demand; the competitor prices; and the revenue alternatives that a supplier can explore (e.g. sale of new goods, services for new goods, services for non-new goods, and repair parts). The combination of these elements reveals several opportunities for revenue generation. This combination may also help to explain the existence of different prices for similar goods and services. The authors referred to this as a flexible pricing policy. Flexible pricing may help manufacturers maximize revenues, and win and maintain customers. Research limitations/implications – The following research questions are suggested for future studies: What other elements should be considered in strategic benchmarking studies? What other elements can influence a flexible pricing policy for goods, spare parts, and services? In what contexts can a flexible pricing policy be applied? How should flexible pricing practices be benchmarked? Practical implications – A strategic benchmarking study must first identify the customers’ value demands. It is then necessary to analyze customer expectations associated to each value demand. As shown, customers may have different expectations for the same product or service. Similar expectations must be grouped together in order to allow a well-structured benchmark. Originality/value – The authors’ findings suggest interesting points to be observed by the manufacturers who supply integrated solutions with a long life cycle.

Aggregate Demand, Vertical Specialization and Growth Accounting

2016 ◽  
Vol 07 (03) ◽  
pp. 1650016
Author(s):  
Hubert Escaith
Keyword(s):  
Income Elasticity ◽  
Developing Economies ◽  
Supply And Demand ◽  
Aggregate Demand ◽  
International Perspective ◽  
Growth Accounting ◽  
Marginal Propensity To Consume ◽  
Marginal Propensity ◽  
Global Economic Governance

Global manufacturing and international supply chains have changed the way trade and economic growth are understood today. Recent statistical advances suggest new ways of looking at growth accounting when global value chains (GVCs) — articulating supply and demand chains from an international perspective — are taken into consideration. The method is applied to the G-20 countries, a group of leading developed and developing economies that took a prominent role in fostering and managing global economic governance. The demand dynamics is first analyzed through a growth-accounting decomposition, then through the long term determinants of income elasticity of imports and the household marginal propensity to consume imported products.

scholarly journals Determinants of Indonesia’s National Income: An Auto-Regressive Distributed Lag Analysis

2020 ◽  
Vol 9 (2) ◽  
pp. 207-218
Author(s):  
Prihartini Budi Astuti ◽  
Nur Khasanah
Keyword(s):  
Economic Growth ◽  
Aggregate Demand ◽  
Government Expenditure ◽  
National Income ◽  
The United States ◽  
Jel Classification ◽  
Distributed Lag ◽  
Long Run ◽  
Auto Regressive ◽  
The Government

At the end of 2019, most countries experienced an economic slowdown due to a trade war between the United States and China. According to macroeconomic theory, aggregate demand is one of the factors that influence economic growth. This study aims to add the debate and fill the gap by studying the relationship between aggregate demand and economic growth in the case of Indonesia. Using an Auto-Regressive Distributed Lag analysis, the results indicate that in the long-run, household consumption and investment had a positive effect on Indonesia's national income in 2010-2019. It means that the government must continue to make policies to maintain the purchasing power of Indonesian consumers, so that public consumption remains high, and maintaining the investment climate to be more conducive. On the other hand, government expenditure and net exports variables have no impact on Indonesia's national income in 2010-2019.JEL Classification: E01, E12, O47How to Cite:Astuti, P. B., & Khasanah, N. (2020). Determinants of Indonesia’s National Income: An Auto-Regressive Distributed Lag Analysis. Signifikan: Jurnal Ilmu Ekonomi, 9(2), 207-218. https://doi.org/10.15408/sjie.v9i2.14469.

Saudi Aramco IPO holds key to diversification plans

2016 ◽  
Keyword(s):  
Leisure Activities ◽  
Value Added ◽  
Cultural Changes ◽  
Content Type ◽  
Goods And Services ◽  
Oil Revenue ◽  
Saudi Aramco ◽  
New Energy ◽  
Vision 2030 ◽  
Crown Prince

Significance This development is at the centre of 'Vision 2030', the kingdom's new medium-term strategy for reducing reliance on crude oil revenue and improving economic efficiency. The unveiling of the strategy last month by Deputy Crown Prince Mohammed bin Salman bin Abd-al-Aziz Al Sa'ud, the country's de facto prime minister, was followed on May 7 by sweeping changes to the cabinet and government structure, including the replacement of the kingdom's long-serving oil minister, Ali al-Naimi. Impacts Value-added tax (VAT) on non-essential goods and services could be introduced by 2020. The new energy minister will have greater ability to push through subsidy reforms. Efforts to value and float Saudi Aramco could spark some opposition from within the royal family. The plan could bring important cultural changes, notably through increasing women's employment, leisure activities and entertainment. If successful, the strategy will help reduce unemployment, although the target of 7% is hugely ambitious.

Pandemic will speed Greece towards teleworking

2020 ◽  
Keyword(s):  
Personal Data ◽  
Direct Interaction ◽  
Value Added ◽  
Content Type ◽  
National Regulation ◽  
Customer Base ◽  
Personal Data Protection ◽  
Operational Costs ◽  
Long Run ◽  
Cloud Technologies

Significance Almost overnight businesses lost contact with their customer base and were largely unable to provide teleworking arrangements for staff. However, larger Greek businesses, particularly those employing cloud technologies, were better placed to safeguard business continuity and gained competitive advantage in the domestic market. Impacts COVID-19 highlights the need for more thorough corporate emergency planning. International competitiveness gains are unlikely as Greek exports are mostly low value-added or based on direct interaction with customers. Operational costs will rise owing to the increased need to provision for cyberattacks and personal data protection litigation cases. Teleworking with inadequate national regulation could undermine working conditions in the long run.

Testing for the Marshall–Lerner condition in Egypt: an empirical analysis

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
John Adams ◽  
Ali Metwally
Keyword(s):  
Trade Balance ◽  
Empirical Work ◽  
Ordinary Least Squares ◽  
Real Effective Exchange Rate ◽  
Content Type ◽  
Goods And Services ◽  
Interest Rate Spread ◽  
Long Run ◽  
Relevant Variables ◽  
Effective Exchange

PurposeThe purpose of this paper is to examine to what extent evidence can be found for the presence of the Marshall–Lerner (ML) condition regarding the trade balances of Egypt. The theoretical basis of the ML is presented and then tested using Egyptian trade data from 1965 to 2017.Design/methodology/approachThe data are analysed via standard ordinary least squares models subject to the constraints imposed by economic theory, specifically ML theory, in which the coefficients represent elasticities. A range of tests are undertaken to establish the validity of the models and the model results including multicollinearity, unit root and co-integration in order to avoid spurious regressions.FindingsThe export model strongly suggests that real exports of Egyptian goods and services are elastic with respect to changes in the real effective exchange rate (REER), with a coefficient weight of −1.64 and is significant at 1%. However, for the import model the coefficient weight of the REER −1.17 and is significant at 1%. This result contradicts ML theory, where an increase in the REER makes imports cheaper and thus causes them to increase.Research limitations/implicationsThe limitations of the study are two in particular, the first is that the frequency of the data employed is annual, not monthly or even quarterly, which means that the sample size would have been larger, and the estimated parameters could have been more accurate in forecasting the future behaviour of exports and imports. There could be several other indicators that might have clear impacts on exports and imports. In other words, it is possible that a model with consumer spending and government spending as well as terms of trade, inflation, interest rate spread and taxes is going to capture more of the variation that occurs in Egypt's trade balance components.Practical implicationsThe results suggest that the Egypt-International Monetary Fund plan (depreciation) is likely to have a positive effect on the economy. However, this does not mean that the deficit of the trade balance is going to change into a surplus once the policies of the plan are fully applied, but it does mean the deficit will reduce. Only in the long run is the trade balance likely to record a sustainable surplus. But the latter will heavily depend on the structure of exports and imports and maintaining price stability, both of which are key government policy areas.Originality/valueThe paper builds on previous theoretical and empirical work in this field and in particular is focussed on Egypt. There are extremely few analyses of the ML condition regarding Egypt. This paper provides new information on this and can also be utilized by researchers to further develop the analysis and method through identification of other potentially relevant variables within a single country ML study.

Sign in / Sign up

Export Citation Format

Share Document