The Looming Central and Eastern European Real Convergence Club. Do Implicit Tax Rates Play a Part?

The paper investigates whether there is a convergence club stance for the Visegrad countries plus Romania and Bulgaria and the part played, in this process, by the implicit tax rates on labour and consumption, respectively. For the purpose of the research, the GDP per capita, productivity and unemployment are used as convergence indicators and dependent variables. The dataset covers the 1995–2016 timeframe and the analysis is based on a panel-model approach. The main results show that the implicit tax on labour has no significant effect on the convergence indicators while the implicit rates on consumption are statistically significant with negative influence. The interpretation of results is made considering a set of control and robustness variables where policy lessons derive from. The conclusion reflects on the policy lessons that can serve to accomplish the convergence club within selected CEE countries: Bulgaria, the Czech Republic, Hungary, Poland, Slovakia and Romania.

Labour Taxation and its Impact on Economic Growth – Complex Analysis

The aim of the article is to provide a complex analysis of labour taxation impact on economic growth in OECD countries. As main approximators of taxation, implicit tax rates and the World Tax Index are used. Methods and tests of dynamic panel regression with the Arellano-Bond estimator are used from the methodological point of view. From the results of complex analysis, it is evident that there exists a non-linear relationship between tax revenues (implicit tax rates, world tax index) and tax burden (tax rates). There also exists a negative relationship between labour taxation and economic growth and the impact of labour taxation is the most harmful for economic growth. Therefore, in an effort to stimulate economic growth, labour taxation expressed by personal income taxes and social security contributions should be reduced.

Implicit Taxes: Evidence from Taxable, AMT, and Tax-Exempt State and Local Government Bond Yields

Pretax yields of state and local government (SALG) bonds are examined for evidence of implicit taxes. The sample includes fully taxable bonds, alternative minimum tax (AMT) bonds (tax-exempt but a tax preference for alternative minimum tax purposes), and tax-exempt bonds (tax-exempt and not a tax preference for AMT purposes). The average risk-adjusted pretax yield on AMT bonds is higher than that of tax-exempt bonds and lower than that of taxable bonds. Implicit taxes are estimated at 25.23 to 29.68 percent for AMT bonds and 33.87 to 35.27 percent for tax-exempt bonds. Results indicate that asset prices are affected by the AMT system and that marginal investors in AMT bonds assess a positive probability (between 28 and 45 percent) of being subject to the AMT. Estimated implicit tax rates on longer-term tax-exempt bonds are higher when yields are compared to those of taxable SALG bonds rather than taxable U.S. Treasury securities.

An Application of the Scholes and Wolfson Model to Examine the Relation between Implicit and Explicit Taxes and Firm Market Structure: An Analysis

Callihan and White (1999) present a methodology for applying Scholes and Wolfson's (1992) model of implicit tax rates to financial statement data. This methodology is aimed at addressing two issues: (1) measurement of implicit tax rates and (2) determination of the extent to which firms possessing market power can shift implicit tax burdens away from the firm. This paper examines Callihan and White's empirically driven definition of implicit tax rates and points to the pitfalls of using this definition for firms that might possess market power. In particular, I show that, since the Callihan and White measure assumes that firms do, in fact, operate in perfectly competitive markets, it cannot be used validly to measure the magnitude of implicit taxes in the presence of firm market power. Additionally, my analysis casts doubt over the validity of Callihan and White's finding that implicit taxes are lower for firms possessing market power.

Implicit Taxation of Pakistan's Agriculture: An Analysis of the Commodity and Input Prices

The purpose of the present paper has been to quantify and discuss the implications of implicit taxes in Pakistan's agriculture. The methodology of the paper consisted of derming the impon and expon parity prices of major agricultural commodities grown in Pakistan, by comparing them with domestic procurement prices. Although the analysis covered only four commodities, implicit tax rates in some of the years from 1970-71 to 1989-90 were as high as 75 percent for cenain commodities. It was only in the case of IRRI rice and sugarcane that domestic prices were above the world levels in some years of the period under consideration. When shown as a percentage of the value-added by agriculture, the taxes on these four commodities, net of the total budgetary subsidies on agricultural inputs, varied from 1.9 percent to 14.9 percent. These tax rates in agriculture compared favourably with the overall tax rates in Pakistan's economy for most of the years. Judged in the light of the relative taxable capacities of agriculture and Pakistan's economy as a whole, implicit taxes were much higher in agriculture than in the other sectors of the economy.