Fiscal Incentives for Conflict: Evidence from India's Red Corridor

Can tax regimes shape the incentives to engage in armed conflict? Indian mining royalties benefit the States, but are set by the central government. India's Maoist belt is mineral-rich, and States are responsible for counterinsurgency operations. We exploit the introduction of a 10% ad valorem tax on iron ore that increased royalty collections of the affected states by a factor of 10. We find that the royalty hike was followed by a significant intensification of violence in districts with important iron ore deposits. The royalty increase was also followed by an increase in illegal mining activity in iron mines.

Economic Reality at the Core of Apple

In Apple, Inc. v. Pepper, the Supreme Court failed to recognize the economic reality at play which sparked considerable confusion and debate about the continued vitality of Illinois Brick. Apple used proprietary technology and threats to both iPhone owners and app developers to compel them to conduct their business in Apple’s App Store. In so doing, Apple created a presumably unlawful bottleneck. This enabled Apple to impose a 30% ad valorem tax on each transaction. The tax, that is, the antitrust damage, is borne by both the iPhone owners and the app developers according to the relative elasticities of the demand and supply. Distributing damages in this way leads to effective antitrust enforcement that does not reward the wrongdoer with ill-gotten gains nor lead to duplicative damages and complex apportioning. Our analysis clarifies the economic reality of the Apple case and provides useful guidance for handling future bottleneck cases.

Assessing the Impact of Cigarette Taxation on the Supply Chain Stakeholders' Revenue Shares in Greece

The chapter aims to analyze the impact of cigarette taxes evolution over the period 1992-2017 on the revenue share of the main tobacco supply chain stakeholders in Greece. This empirical analysis uses a pooled time series from 1992 through 2017 including a data set of retail prices, three tax groups levied on cigarettes (specific tax, ad valorem tax, and V.A.T.), and revenue shares for three categories of stakeholders. The results indicate that the revenue share of the stakeholders is decreasing over the whole period, and specifically, their shares drop by half in the last 15 years. The regression results show that the revenue shares of tobacco companies are most affected by both excise taxes in a negative way, and similarly, both price and the excises affect significantly the revenue share of retailers, whereas the findings regarding distributors' revenues are insignificant. This knowledge is likely to be useful for policymakers in the development of effective tobacco control policies.

Powierzchniowy a katastralny system opodatkowania nieruchomości w Polsce

The article explores the economic aspects of area and value-based taxation of Polish real estate. It begins with the presentation of information on the conditions of property taxation in Poland. Next, a review of the research on the cadastral tax is provided, as well as the assumptions of the econometric model used for mass valuation of the analysed real estate. The main part of the article contains the results of the simulation of replacing the property tax with an ad valorem one. Particular attention is given to the impact of the cadastral tax rate on the revenues of municipalities and changes in the tax burden on individual properties. The main aim of this study was to show the importance of the proper setting of the ad valorem tax rate in the process of reforming the property taxation system.

Fiscal and Public Health Impact of a Change in Tobacco Excise Taxes in Ghana

This working paper predicts the fiscal and public health outcomes from a change in the excise tax structure for cigarettes in Ghana. More than 5,000 people are killed by diseases caused by tobacco every year in Ghana (Tobacco Atlas 2018). Currently the country has a unitary tax administration approach, with a uniform ad valorem tax structure on all excisable products, including tobacco. However, the ECOWAS directive on tobacco control, in line with the WHO Framework Convention on Tobacco Control (WHO 2003), recommends a simple tax structure – using a mixed excise system with a minimum specific tax floor to overcome the limitations of an ad valorem system on tobacco products, especially cigarettes. The study therefore simulates mixed tax policy interventions, and assesses their effect on government revenue and public health relative to the current ad valorem tax system. Primary data collection of tobacco prices in three geographical zones of the country was conducted in February 2020, across both rural and urban localities. This was supported with secondary data from national and international databases. Based on the assumption that Ghana adopts a mixed tax structure, the simulation shows that, if the government imposes a specific excise tax of GH₵4.00 (US$0.80) per pack in addition to the current ad valorem rate of 175 per cent of the CIF value, the average retail price of a cigarette pack would increase by 128 per cent, cigarette consumption decrease by 27 per cent, tobacco excise tax revenue increase by 627 per cent, and overall tobacco-related government tax revenue increase by 201 per cent.1 Additionally, there would be significant declines in smoking prevalence (3.3%), smoking intensity (1,448 cigarettes per year), and 3,526 premature smoking-related deaths would be avoided. The paper advocates for a strong tax administration and technical capacity, with continuous commitment by the government to adjust the tax rate in line with the rate of inflation and per capita income growth.

Measuring the effects of the new ECOWAS and WAEMU tobacco excise tax directives

BackgroundIn December 2017, the 15-member ECOWAS (Economic Community of West African States) and the 8-member WAEMU (West African Economic and Monetary Union, a subset of ECOWAS) passed new Tobacco Tax Directives. Both Directives increased the minimum ad valorem excise tax rate to 50%. In addition the ECOWAS Directive introduced a minimum specific tax (US$ 0.02/stick), but the WAEMU Directive did not. This paper examines the likely effects of these new Directives on cigarette prices, sales volumes and revenues.MethodTax simulation models using comparable data were constructed for each of the 15 countries to estimate the effects of the ECOWAS and WAEMU Directives.ResultsIf the 15 ECOWAS members implement the ECOWAS Directive it would substantially increase the retail price of cigarettes (unweighted average 51%, range: 12% to 108%), decrease sales volumes (22%, range: −8% to −39%) and increase tax revenue (373%, range: 10% to 1243%). The impact of the WAEMU Directive on WAEMU countries’ cigarette prices (unweighted average +2%), sales volumes (−1%) and revenue (+17%) is likely to be minimal.ConclusionsThe 2017 ECOWAS Directive, which adds a specific excise tax per pack, along with an increase in the ad valorem tax, substantially improves its members’ cigarette tax structure. The specific tax overcomes the weakness of the ad valorem excise tax, since it does not depend on import or ex-factory values, which comprise only a small part of the retail price in ECOWAS countries. We recommend that WAEMU countries adopt the ECOWAS Directive, rather than the WAEMU Directive.

Homestead Exemptions from Taxation

This chapter assesses Article XII-A of the Oklahoma constitution, which concerns homestead exemptions from taxation. Section 1 provides that “all homesteads as is or may be defined under the Laws of the State of Oklahoma for tax exemption purposes, may hereafter be exempted from all forms of ad valorem taxation by the Legislature.” An “ad valorem tax” is a tax that is imposed on the value of property. Section 2 was added by initiative petition in 1935 and tied the legislature’s hands by stating that the definition of a homestead may not be diminished by the legislature; the legislature may only increase or expand the definition. Additionally, statutes regarding homesteads’ exemptions from ad valorem taxation are to be in effect for at least twenty years after enactment; after that, those statutes can be repealed or amended by the legislature.

The Unintended Consequences of Tax Policy: How Mississippi's Ad Valorem Tax Structure Led to Environmental Devastation

ABSTRACT This is a story in two parts. The first describes the timber industry and the ad valorem tax structure in Mississippi during the first several decades of the 20th century. The second introduces Ran Batson, an entrepreneur and lumber mill operator, whose history illustrates the adverse consequences of the Mississippi ad valorem tax as it inspired extensive clear-cutting of forests and resulting devastation. Fortunately, the Mississippi tax structure has subsequently changed to a more favorable approach, and in the last several years of his life, Ran Batson learned the benefits possible from managing his land holdings in a more environmentally sensitive manner.

Tax efficiency in a model of endogenous markups

Efficiency comparison of ad valorem and unit taxes has been traditionally based on consumer welfare. However, if the tax instrument also affects the distribution of firms over their productivities, the policy maker may be concerned about the implications on aggregate productivity as well. This paper makes an efficiency comparison of ad valorem and unit taxes by allowing the distribution of firms to respond to changes in policy. First, I make an efficiency comparison in a model with monopolistically competitive firms that are homogenous with respect to their productivity levels. Consumer preferences exhibit love for variety and allow firms to adjust their markups. I find that ad valorem tax is more efficient. Allowing for firm heterogeneity overturns this result at high revenue requirements. As the tax rate increases, ad valorem tax causes excessive exit of firms which makes the market more competitive. Hence, few surviving firms price lower by decreasing their markups. Lower prices decrease the tax revenue collected. As a result under ad valorem tax regime, higher consumer surplus is dominated by lower tax revenue. On the other hand, production is concentrated among relatively more productive firms. Thus, aggregate productivity is higher under ad valorem tax regime.