Structural breaks in the central government taxes in India, 1950-1951 to 2013-2014

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Anita Rath
Keyword(s):  
Structural Breaks ◽  
Central Government ◽  
Empirical Literature ◽  
Tax Revenue ◽  
Tax Rates ◽  
Tax Structure ◽  
Relative Significance ◽  
Content Type ◽  
Simulation Exercise ◽  
Tax Regimes

Purpose The purpose of this paper is to find out the factors contributing to major shifts in the growth of tax revenue through the estimation of structural breaks and analysis of major tax regimes. Recent contributions to optimal tax theory and empirical literature on the Laffer curve effect, based on elasticity of taxable income, challenge the settled understanding on the rate-revenue relationship. In this backdrop, the objective of the paper is to find out the relative significance of changes in tax rate, tax base and administrative reforms in affecting the growth of tax revenue in India. The paper considers tax data spanning a period of six and half decades for five major components of direct and indirect taxes (corporation, personal income, customs, excise and service) of the central government of India. Design/methodology/approach Unknown break point(s) – single and multiple – in the tax structure are identified by using the Quandt-Andrews and Bai-Perron econometric tests. These tests were conducted for two models of growth of taxes (tax revenue and tax-NDP ratio) estimated using semi-log functions. A simulation exercise was conducted to find out the robustness of the results by varying the trimming parameter and number of breaks. An analytical framework is used to understand the factors associated with these breaks. Findings There is more than one break identified for every tax component as per the results of Bai–Perron test. The simulation exercise suggests that estimated breakpoints are mostly robust. Economic growth, structural changes in the economy, simplification and rationalization of tax structure, tax competition, policies such as liberalization have contributed to the changing tax regimes. Results of this study suggest that high tax rates have not been, in particular, detrimental to achieving growth in revenue and factors other than changes in tax rates have been more prominent in bringing about the shifts. Originality/value This is, perhaps, the first paper exploring the multiple structural breaks in the fiscal variables in India. It offers an understanding of the changing regimes of central government taxes and the underlying factors for the same.

Taxation in a mixed economy: the case of China

2017 ◽  
Vol 34 (1) ◽  
pp. 49-61 ◽  
Author(s):  
Davidson Sinclair ◽  
Larry Li
Keyword(s):  
Income Tax ◽  
Central Government ◽  
Corporate Income Tax ◽  
Tax Rates ◽  
Government Ownership ◽  
Effective Tax Rate ◽  
Effective Tax Rates ◽  
Content Type ◽  
Tax Rate ◽  
For Profit

Purpose The purpose of this paper is to investigate how Chinese firms’ ownership structure is related to their effective tax rate. The People’s Republic of China provides an interesting environment to examine the corporate income tax. Government has significant ownership stakes in the for-profit economy and state-owned enterprises (SOEs) are liable to the corporate income tax. This is very different to most other economies where SOE tends to dominate the not-for-profit economy and pays no corporate income tax. Government ownership also varies between the central government and local government in addition to state asset management bureaus. This provides a rich institutional background to examining the corporate income tax. Design/methodology/approach A panel data analysis approach is used to examine relationship between ownership structure and effective tax rates of all public firms in China from 1999 to 2009. Findings The authors report that effective tax rates do appear to vary across the ownership types, but that SOEs pay a statistically higher effective tax rate than to non-state-owned. In addition, local government owned SOE pay higher effective tax rates than central government and SAMB owned SOE. The authors also investigate Zimmerman’s (1983) political cost hypothesis. Unfortunately, these results are econometrically fragile with the statistical significance of those results varying by empirical technique. Originality/value This paper provides insight into government ownership and taxation in China.

Impact of trade facilitation reforms on tax revenue

2017 ◽  
Vol 44 (5) ◽  
pp. 765-780 ◽  
Author(s):  
Sena Kimm Gnangnon
Keyword(s):  
Developing Countries ◽  
Fixed Effects ◽  
Data Availability ◽  
Empirical Literature ◽  
Future Research ◽  
Tax Revenue ◽  
Trade Facilitation ◽  
Content Type ◽  
The World ◽  
The Impact

Purpose The purpose of this paper is to contribute to the empirical literature of the macroeconomic effect of trade facilitation reforms by examining the impact of the latter on tax revenue in both developed and developing countries. The relevance of the topic lies on the fact that at the Bali Ministerial Conference of the World Trade Organization (WTO) in 2013, Trade Ministers agreed for the first time since the creation of the WTO (in 1995) on an Agreement to facilitate trade around the world, dubbed Trade Facilitation Agreement (TFA). The study considers both at-the-border and behind-the border measures of Trade Facilitation. Design/methodology/approach To conduct this study, the authors rely on the literature related to the structural factors that explain tax revenue mobilization. The authors mainly use within fixed effects estimator. The analysis relies on 102 countries (of which 23 industrial countries) over the period 2004-2007 (based on data availability). A focus has also been made on African countries, within the sample of developing countries. Findings The empirical analysis suggests evidence of a positive and significant effect of trade facilitation reforms on non-resources tax revenue, irrespective of the sample of countries considered in the analysis. Research limitations/implications This finding should contribute to dampening the fear of policymakers in developing countries, including Africa that the implementation of the TFA would entail higher costs, without necessarily being associated with higher benefits. An avenue for future research would be to extend the period of the study when data would be available. Originality/value To the best of the authors knowledge, this study had not been performed in the literature of the determinants of tax revenue mobilization, although fact-based analysis was performed.

On the effectiveness of state tax and expenditure policies to encourage entrepreneurship

2019 ◽  
Vol 8 (4) ◽  
pp. 523-548
Author(s):  
Donald Bruce ◽  
Elizabeth A. Glass ◽  
Matthew C. Harris
Keyword(s):  
Small Firms ◽  
Statistical Significance ◽  
Entrepreneurial Activity ◽  
Empirical Literature ◽  
Tax Rates ◽  
Content Type ◽  
Entrepreneurial Performance ◽  
Self Employment ◽  
State Tax ◽  
Employment Rates

Purpose The purpose of this paper is to expand the empirical literature on state tax and expenditure policies and entrepreneurial activity in several meaningful ways. Design/methodology/approach The authors update the panel data to include several more recent years and also consider other elements of state policy. Findings The most important takeaway is that even after dealing with some of the known shortcomings of dynamic panel analysis, we are still not able to find economically meaningful impacts of state tax and expenditure policies (generally defined) on entrepreneurial performance. Research limitations/implications Earlier studies that have found statistical significance have generally been limited to extensive-margin impacts on such things as self-employment rates or counts of new or small firms. When the authors examine what policy makers actually care about – things like income and employment among entrepreneurial ventures – the authors do not find much in the way of useful policy impacts. Practical implications To be sure, the authors find entrepreneurial performance to be statistically significantly related to certain tax rates and expenditure amounts, but the magnitudes of our estimated results cast serious doubts on the usefulness of these particular policy levers for generating meaningful improvements in entrepreneurial success. Originality/value The authors’ primary contribution is to improve the empirical consideration of the time series properties of the data. The authors provide a battery of more general and robust analyses to more completely surround the question.

Value capture taxation: alternate sources of revenue for Sub-Central government in Australia

2019 ◽  
Vol 24 (2) ◽  
pp. 200-216
Author(s):  
Vince Mangioni
Keyword(s):  
Grounded Theory ◽  
Central Government ◽  
Capital Gains ◽  
Transport Infrastructure ◽  
Tax Revenue ◽  
Capital Gains Tax ◽  
Public Infrastructure ◽  
Value Capture ◽  
Content Type ◽  
A Value

Purpose Australia’s Future Tax System (2009) among its recommendations identified the need for realignment of tax revenue across the tiers of government in Australia, as well as the need to raise additional revenue from land-based taxes. In achieving these objectives, this paper aims to examine the revenues generated from land and how capital gains tax may be reconceptualised as a value capture tax resulting from the rapid urbanisation of Australia’s cities. The development of a theoretical framework realigns the emerging rationale of a value capture tax, as a means for revenue to be divested from central government in the form of capital gains, to sub-central government as a value capture tax. Design/methodology/approach A qualitative research methodology comprising grounded theory and phenomenological research is used in undertaking the review of tax revenue collection from state land tax, conveyance stamp duty, local government rating and Commonwealth capital gains tax. Grounded theory is applied for constant comparison of the data with the objectives of maximising similarities and differences in these revenues with an analytical construct as defined by Strauss and Corbin (1990, p. 61). Findings The paper finds that realigning revenue from land-based taxes against the principles of good tax design provides greater opportunity to raise additional revenue to fund public infrastructure while decentralising revenue from central government. It provides an alternate mechanism for revenue transfer from central to sub-central government while conceptually improving own source revenue from value capture taxation as a new revenue source. Research limitations/implications The limitation of this paper is the ability to quantify the potential increase that would be generated in the form of value capture revenue. It is demonstrated in the paper that capital gains tax took over 15 years for revenue generation to crystallise, a factor that would likely occur in the potential introduction of a value capture tax for funding transport infrastructure. Practical implications The pathway to introducing a value capture tax is through re-innovating capital gains tax as a value capture tax directly hypothecated to funding transport infrastructure that results in the uplift in values of the surrounding property from which revenue is raised. Originality/value This paper provides a new approach in contributing to funding the capital outlay of public infrastructure in lieu of central government consolidated revenue allocated through the Commonwealth Grants Commission. It provides a much-needed approach to decentralising revenue from the Commonwealth to sub-central government in Australia which has one of the most centralised tax systems in the OECD.

India’s Transition from State Level Sales Tax to Value Added Tax (VAT)

2014 ◽  
Vol 1 (1) ◽  
Author(s):  
Vandana Jain
Keyword(s):  
Value Added ◽  
State Level ◽  
Sales Tax ◽  
Tax Revenue ◽  
Tax Rates ◽  
Value Added Tax ◽  
Commodity Taxation ◽  
Tax Reforms ◽  
Tax Regimes ◽  
Phase Out

An outstanding development in the sphere of State finances since Independence has been the precipitous growth in the relative revenue significance of sales tax levied under entry 54 of List II in the Seventh Schedule of the Constitution. It has grown considerably in depth and coverage, and forms the mainstay of States. tax revenue. Prior to tax reforms initiated in early 1990s, sales tax was characterised by a multiplicity of tax rates and exemptions, lack of uniformity across States, large number of exemptions and concessions, and differing procedures for tax collection. In mid-1990s, most states had agreed to phase out the incentive-related exemptions and implement floor rates of sales tax. As part of the nation-wide efforts to redesign commodity taxation and the implementation of CENVAT at the level of the Centre, many States have modified their sales tax regimes to launch a state level VAT under the scheme prepared by the Empowered Committee for this purpose. This paper explains and examines various problems associated with sales tax and its switch over to Value Added Tax (VAT) in recent years.

Pajak Daerah dan Restribusi Daerah (PDRD) Dikaitkan dengan Pertumbuhan Investasi

2020 ◽  
Vol 2 (2) ◽  
pp. 154
Author(s):  
Fernando Hariandja
Keyword(s):  
State Government ◽  
Central Government ◽  
Tax Revenue ◽  
Tax Rates ◽  
Fiscal Autonomy ◽  
Regional Authority ◽  
The People ◽  
Direct Compensation ◽  
The Government ◽  
Investment Growth

Tax has a very important role in the life of the country, especially in the implementation of development. Tax revenue is the payment of contributions by the people to the government that are regulated in the law without direct compensation. As is the case with central government taxes, Regional Taxes have an important role in implementing state/government functions, both in the functions of regulation, budgeting, redistributive, and allocation of resources and a combination of the four. A good local tax in principle must provide adequate income for regions with the level of fiscal autonomy they have. Some regions do accommodate the function of revenue and regulation in the formulation of Regional Tax policies. The step that has not been widely considered by the regions is the provision of Regional Tax incentives to attract investment in the regions. In the current era of regional autonomy, regions are given greater authority to regulate and manage their own households. The aim is to bring government services closer to the community. Anyway, President Joko Widodo often complained about the small value of investment coming into Indonesia, one of which is caused by the irrationality of the Regional Tax rates in the eyes of investors. This paper analyzes what policies the government has taken towards PDRD, which are considered to have many of these problems to increase investment growth in Indonesia. To overcome this, the government has made several efforts, one of which is to establish the Omnibus Law. However, the formation of the Omnibus Law itself actually unwittingly has the potential to erode the regional authority to look for sources of locally-generated revenue (PAD). If PAD is reduced, automatically the level of regional dependence on funds from the central government will be even greater, and if PAD is low, then the level of local government public service to the community is also feared to be reduced.

scholarly journals Analisis Efektivitas Dan Kontribusi Pajak Reklame Dan Pajak Restoran Terhadap Pendapatan Asli Daerah Kota Bogor Tahun 2015-2019

2021 ◽  
Vol 9 (1) ◽  
pp. 81-90
Author(s):  
Eka Yuniati ◽  
Yuliandi Yuliandi
Keyword(s):  
Qualitative Method ◽  
Central Government ◽  
Tax Revenue ◽  
Regional Government ◽  
Tax Rates ◽  
Contribution Ratio ◽  
Tax Collection ◽  
Local Revenue ◽  
The Poor ◽  
Data Checking

Local Revenue is a source of original revenue derived from the potential of the region it self. Local Revenue is often used as an indicator of a region's progress. If the original income of a region is high, the economy of the area is considered advanced. The higher the Local Revenue received, the less dependency between the Regional Government on the Central Government. The largest revenue potential for Local Revenue is generated from local tax collection. One of the potential local tax revenues in Bogor City is the advertisement tax and restaurant tax. The purpose of this study was to determine the level of effectiveness and contribution of advertisement tax and restaurant tax to Local Revenue in Bogor City and to find out the efforts made by the Bogor City Regional Revenue Agency in increasing its local tax revenue. The research method used is descriptive qualitative method. The result of this research is that the effectiveness of the advertisement tax and restaurant tax collection in Bogor City has been very effective, proven by the average advertisement tax effectiveness ratio of 104.06% and restaurant tax of 103.93%. The contribution of advertisement tax and restaurant tax to Local Revenue in Bogor City is still not good, as evidenced by the average advertisement tax contribution ratio of 1.43% including very poor criteria, and the average restaurant tax contribution of 12.99. % is in the poor criteria. Efforts made by the Bogor City Regional Revenue Agency in increasing advertisement tax revenue and restaurant tax are by collecting taxpayer data, checking tax rates, monitoring tax administration, and building communication and establishing closeness with the community.   Keywords: Effectiveness, Contribution, Advertising Tax, Restaurant Tax, Local Revenue

scholarly journals Differential impacts of the US–China trade war and the outbreak of COVID-19 on Chinese air quality

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Muhammad Shahbaz ◽  
Avik Sinha ◽  
Muhammad Ibrahim Shah
Keyword(s):  
Air Quality ◽  
Structural Breaks ◽  
Health Hazard ◽  
Empirical Literature ◽  
Multiple Structural Breaks ◽  
Content Type ◽  
China Trade ◽  
The Us ◽  
Trade War ◽  
The Impact

PurposeOver the last couple of years, the Chinese manufacturing sector was affected by the onset of the US–China trade war and the outbreak of coronavirus disease 2019 (COVID-19). In such a scenario air quality in China has encountered a shock, and the impacts of these two incidents are unknown. In this study, the authors analyze the convergence of air quality in China in the presence of multiple structural breaks and how the impacts of these two events are different from each other.Design/methodology/approachIn order to assess the nature of shocks in the presence of multiple structural breaks, unit root tests with multiple structural breaks are employed.FindingsThe results reveal that air quality in China is showing the sign of convergence, and it is consistent across 18 provinces which are worst hit by the outbreak of COVID-19. In the presence of transitory shocks, the impact of COVID-19 outbreak is found to be higher, whereas the impact of the US–China trade war is found to be more persistent. Lastly, the outbreak of COVID-19 has been found to have more impact on pollutants with higher severity of health hazard.Originality/valueTo the best of the authors’ knowledge, this is the first study that contributes to the empirical literature in terms of investigating the convergence of overall air pollution and individual air pollutants taking COVID-19 and the trade war into account.

Tax structure and economic growth in India: insights from ARDL model

2020 ◽  
Vol 13 (3) ◽  
pp. 589-605
Author(s):  
Yadawananda Neog ◽  
Achal Kumar Gaur
Keyword(s):  
Economic Growth ◽  
Empirical Literature ◽  
Tax Structure ◽  
Estimation Model ◽  
Data Set ◽  
Ardl Model ◽  
Content Type ◽  
Corporation Tax ◽  
Long Run ◽  
Short Run

Purpose In the academic debate, the tax–growth relationship is always a controversial one. This paper aims to investigate the relationship between tax structure and economic growth in India for the period 1980-2016. After controlling for total tax revenue share to GDP in the estimation model, the authors examine the long-run and short-run relationship between tax structure and growth in India. Design/methodology/approach Auto-regressive distributed lag (ARDL) model has been used in this study. This bound cointegration model has certain advantages to the traditional cointegration model. This study also applies the threshold cointegration test of Hansen and Seo (2002) for examining non-linearity in tax–growth nexus. Findings The analysis shows that income tax share, corporation tax share and excise tax share are harmful to growth in the long-run. While the custom share is enlarging the growth performance. Corporation tax share is also reducing growth in the short-run. Following the Pesaran et al. (2001) approach of ARDL bound testing, the authors find the existence of a long-run relationship between studied variables. However, this study does not find any existence of threshold effect in the tax–growth relationship for India. Practical implications Based on the empirical findings, the author suggests that the prime tax change, which has the potential to impact both long-run growth and short-run economic recovery is the reduction of corporate tax rate with sustainable revenue generation. It will definitely enlarge the foreign direct investment, saving and investment in India. Originality/value This study will be a contribution to the empirical literature by investigating “tax–growth” relationship in the Indian case. To the knowledge, this will be the first study to examine this relationship for India with a recent data set.

scholarly journals Tax revenue instability and tax revenue in developed and developing countries

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Sèna Kimm Gnangnon
Keyword(s):  
Economic Growth ◽  
Developing Countries ◽  
Public Expenditure ◽  
Terms Of Trade ◽  
Empirical Literature ◽  
Tax Revenue ◽  
Content Type ◽  
Inflation Volatility ◽  
Negative Effect ◽  
Growth Volatility

Purpose This paper aims to explore the effect of non-resource tax revenue instability on non-resource tax revenue in developed and developing countries. Design/methodology/approach The analysis has used an unbalanced panel data set of 146 countries over the period 1981–2016, as well as the two-step system generalized methods of moment approach. Findings The empirical analysis has suggested that non-resource tax revenue instability influences negatively non-resource tax revenue share of gross domestic product. The magnitude of this negative effect is higher in less developed countries than in relatively advanced countries. This negative effect materializes through public expenditure instability: non-resource tax revenue instability exerts a higher effect on non-resource tax revenue share as the degree of public expenditure instability increases. Finally, non-resource tax revenue instability exerts a higher negative effect on non-resource tax revenue share as economic growth volatility rises, inflation volatility increases and terms of trade instability increases. Research limitations/implications The main policy implication of this analysis is that policies that help ensure the stability of non-resource tax revenue also contribute to improving countries’ non-resource tax revenue share. For example, governments’ measures that help cope with or prevent the severe adverse effects of shocks on economies (shocks that could translate into higher tax revenue instability) would ultimately help enhance countries’ tax revenue performance. Practical implications The severity of the current COVID-19 pandemic shock (which is a supply and demand shock) and the macroeconomic uncertainty that it has generated – inter alia, in terms of economic growth instability, terms of trade instability, inflation volatility and public expenditure instability – are likely to result in severe tax revenue losses. Governments in both developed and developing countries would surely learn from the management of this crisis so as to prepare for possible future economic, financial and health crises with a view to dampening their adverse macroeconomic effects, including here their negative tax revenue effects. Originality/value To the best of the author’s knowledge, this topic is being addressed in the empirical literature for the first time.

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