Unit Sales and Price Effects of Preannounced Consumption Tax Reforms: Micro-level Evidence from European VAT

2021 ◽  
Vol 13 (3) ◽  
pp. 103-134
Author(s):  
Thiess Buettner ◽  
Boryana Madzharova
Keyword(s):  
Rate Change ◽  
Substitution Effects ◽  
Consumption Tax ◽  
Tax Reforms ◽  
Product Data ◽  
Tax Rate ◽  
Price Effects ◽  
Permanent Effect ◽  
Micro Level ◽  
Tax Changes

We study the effects of consumption tax changes on prices and unit sales of durables utilizing micro-level product data. The results show that tax rate changes are fully shifted into prices. An anticipated tax rate change causes a temporary shift in unit sales shortly before implementation, which is more than offset by adjustments upon and after implementation. If the tax rate increases by 1 percentage point, unit sales rise by 2.5 percent on average in the last month before implementation. The permanent effect is a drop in sales by 2 percent below their original level, implying relatively strong intertemporal substitution effects. (JEL H25, H31, E62, H24, D12, E21)

scholarly journals Tax Policy and Income Inequality in the Visegrad Countries

2015 ◽  
Vol 61 (6) ◽  
pp. 12-18
Author(s):  
Anna Moździerz
Keyword(s):  
Income Inequality ◽  
Tax Policy ◽  
Negative Impact ◽  
The State ◽  
Consumption Tax ◽  
Tax Reforms ◽  
Tax Rate ◽  
Recent Financial Crisis ◽  
The Impact ◽  
Visegrád Countries

Abstract The financialisation of economies is believed to be the primary cause of the increase in income inequality in the world, occurring on a scale unseen for more than 30 years. One can hypothesise that it is the state that is responsible for the widening inequality, as the state has not sufficiently used the redistributive function of taxation. The purpose of this paper is to study the impact of tax policy on income inequality in Poland, the Czech Republic, Slovakia and Hungary. These so-called Visegrad countries have, in the last several years, carried out some controversial experiments with tax policy, specifically in terms of the flattening of tax progressivity or its replacement with a flat tax, which led to the weakening of the income adjustment mechanism. The imbalance between income tax and consumption tax has contributed to perpetuating income inequality. The verification of tax systems carried out during the recent financial crisis has forced the countries included in this research to implement tax reforms. The introduced changes caused various fiscal and redistributive effects. Analyses show that the changes in income taxation and an increase in the consumption tax rate had the most negative impact on the income and asset situation in Hungary.

ARE TAX CUTS EFFECTIVE EVEN IN ANTICIPATION OF A FUTURE TAX INCREASE? EVIDENCE FROM JAPAN'S UNIQUE EPISODES IN THE 1990S

2007 ◽  
Vol 52 (02) ◽  
pp. 167-177 ◽  
Author(s):  
MASAHIRO HORI ◽  
SATOSHI SHIMIZUTANI
Keyword(s):  
Family Income ◽  
Rate Increase ◽  
Household Consumption ◽  
Ricardian Equivalence ◽  
Consumption Tax ◽  
Tax Rate ◽  
Level Data ◽  
The Family ◽  
Micro Level ◽  
Tax Cuts

This paper empirically investigates the effects of the 1995 and 1996 tax cuts in Japan. Both tax cuts were introduced to compensate consumers for an impending consumption tax rate increase from 3% to 5% in 1997. We use micro-level data of the Family Income and Expenditure Survey to evaluate effects of these tax cuts on household consumption, focusing on the differences between the two episodes. Our estimates indicate that the Ricardian equivalence largely holds. Only the 1995 tax cut distinctly stimulated consumption on its impact, while the 1996 tax cut had almost no effect on the consumption, presumably because it was implemented much closer to the coming tax increase.

scholarly journals Who Really Benefits from Consumption Tax Cuts? Evidence from a Large VAT Reform in France

2019 ◽  
Vol 11 (1) ◽  
pp. 38-63 ◽  
Author(s):  
Youssef Benzarti ◽  
Dorian Carloni
Keyword(s):  
Value Added ◽  
Consumption Tax ◽  
Difference In Differences ◽  
Firm Level ◽  
Employment Effects ◽  
Level Data ◽  
Price Effects ◽  
Firm Level Data ◽  
Material Goods ◽  
Firm Owners

This paper evaluates the incidence of a large cut in value-added taxes (VATs) for French sit-down restaurants in 2009. In contrast to previous studies, which only focus on the price effects of VAT reforms, we estimate the effects of the VAT cut on four groups: workers, firm owners, consumers, and suppliers of material goods. Using a difference-in-differences strategy on firm-level data, we find that: firm owners pocketed more than 55 percent of the VAT cut; consumers, sellers of material goods, and employees shared the remaining windfall with consumers benefiting the least; and the employment effects were limited. (JEL H22, H25, L83)

Dynamic effects of consumption tax reforms with durable consumption

2020 ◽  
Vol 20 (2) ◽  
Author(s):  
Qian Li
Keyword(s):  
Generation Model ◽  
Consumption Tax ◽  
Income Risk ◽  
Tax Reforms ◽  
Market Completeness ◽  
Durable Consumption ◽  
Poor Households ◽  
Borrowing Constraint ◽  
The Difference ◽  
Consumption Taxes

AbstractThis paper introduces durables into a dynamic general equilibrium overlapping generation model with idiosyncratic income shocks and endogenous borrowing constraints, which depend on durables. The aim of this paper is to evaluate the welfare effects of consumption tax reforms in a richer model that captures the difference between nondurable and durable consumption. When durables are considered, the standard results that a shift to consumption taxes is welfare improving are overturned. The mechanism of this opposing result is that consumption tax makes durable consumption more expensive without relaxing the borrowing constraint. The inability of borrowing to insure against income risk deviates the economy further away from market completeness and particularly hurts young and poor households. As a result, welfare decreases, coupled with negative redistribution.

Retrospective Analysis of Tobacco Control Measures and Policies in China

2021 ◽  
Vol 7 (4) ◽  
pp. 295-299
Author(s):  
Lian He ◽  
Xiaoxin Chen ◽  
Chunzi Shao
Keyword(s):  
Tobacco Control ◽  
Control Period ◽  
Control Measures ◽  
Chinese Government ◽  
Consumption Tax ◽  
Short Term ◽  
Tax Rate ◽  
Effective Role ◽  
Regulatory Measures ◽  
And Control

Objectives: Tobacco control measures can be divided into three types: regulatory, economic, and informational respectively. This paper focuses on the role and effect of different types of tobacco control measures during the epidemic prevention and control period in China. Conclusion: Firstly, as strong and powerful measures, economic measures can significantly reduce cigarette sales in the short term. However, the Chinese government did not adjust the cigarette consumption-tax rate during the period. Economic measures thus did not play an important role. Secondly, Due to few people in public places and workplaces, regulatory measures were "out of effect" in a short term. Therefore, there were insufficient evidence to find out whether regulatory measures are effective or not. Finally, China's tobacco production increased slightly during this period. This reflected that informational measures did not play an effective role.

scholarly journals What are effects of tax changes on market risk? - a case in listed Viet Nam investment and financial service companies

2021 ◽  
Vol 7 (Extra-E) ◽  
pp. 497-504
Author(s):  
Phan Anh ◽  
Nguyen Dinh Trung ◽  
Dinh Tran Ngoc Huy
Keyword(s):  
Service Industry ◽  
Stock Exchange ◽  
Market Risk ◽  
Financial Service ◽  
Viet Nam ◽  
Tax Rates ◽  
Tax Rate ◽  
Financial Service Industry ◽  
Global Stock Markets ◽  
Tax Changes

The financial crisis has been affected many global stock markets, as well as the Viet Nam stock exchange. This study analyzes the impacts of tax policy on market risk for the listed firms in the non-banking financial service and investment industry, so-called financial service industry, as it becomes necessary. First, by using quantitative and analytical methods to estimate asset and equity beta of total 10 listed companies in Viet Nam financial service industry with a proper traditional model, we found out that the beta values, in general, for many companies are acceptable. Second, under 3 different scenarios of changing tax rates (20%, 25% and 28%), we recognized that there is not large disperse in equity beta values, estimated at 1,048, 1,050 and 1,052.These values are just little higher than those of the listed VN construction firms but much higher than those of listed banking firms. Third, by changing tax rates in 3 scenarios (25%, 20% and 28%), we recognized equity /asset beta are most the same (0,23 and 0,16) if tax rate increases from 20% to 25%, then goes up from 25% to 28%.

scholarly journals Does Cutting the Tax Rate to Zero Induce Behavior Different from Other Tax Cuts? Evidence from Pakistan

2020 ◽  
Vol 102 (3) ◽  
pp. 426-441 ◽  
Author(s):  
Mazhar Waseem
Keyword(s):  
Low Income ◽  
Tax Evasion ◽  
Tax Reforms ◽  
Middle Income ◽  
Tax Rate ◽  
Taxable Income ◽  
Administrative Records ◽  
The Difference ◽  
Wage Earners ◽  
Tax Cuts

Using a series of Pakistani tax reforms and administrative records, I document that taxable income responses induced by to-zero tax cuts are orders of magnitude larger than ones induced by similar-sized other cuts. This finding is remarkably robust to alternative specifications and holds for both the self-employed and wage earners. I explore salience, selective enforcement, and discontinuous evasion costs as explanations of the observed behavior. I find that the data favor the last explanation. The difference between the two sets of responses is primarily driven by a large, discrete tax evasion response, which is included in the former but not in the latter behavior. I estimate the difference as a lower bound on tax evasion, showing that at least 70% of the income of low- and middle-income self-employed and 1% of low-income wage earners goes unreported.

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