This document summarizes key concepts from Chapter 10 of the textbook "Black et al" on tax efficiency and tax reform. It discusses the excess burden of taxation using indifference curve analysis and the consumer surplus approach. It also covers tax efficiency, administrative efficiency, tax flexibility, patterns of taxation in developed and less developed countries, directions of international tax reform, and tax reform experiences in South Africa. The key ideas are analyzing taxes using the excess burden and exploring how to increase tax and administrative efficiency.
Is the process by which the sovereign, through its lawmaking body raises revenues used to defray expenses of government.
Means of the government in increasing its revenue under the authority of the law purposely used to promote welfare and protection of its citizenry.
Is the process by which the sovereign, through its lawmaking body raises revenues used to defray expenses of government.
Means of the government in increasing its revenue under the authority of the law purposely used to promote welfare and protection of its citizenry.
This paper investigates the relationship between tax structures and economic growth in a panel of developed and developing countries, using the new ICTD GRD. It sought to understand the effects of tax structure on GDP growth, since many previous studies have only focused on OECD countries.
It is also motivated by the IMF Policy prescription (IMF 2011), of on-going shift from reliance on trade taxes to VAT, especially in low income countries. It further sought to understand the implications of such structural shifts with studies showing that revenue recovery following trade liberalisation has been poor in low- and middle- income countries (Baunsgaard & Keen, 2010).
Results suggest that shifts away from trade and consumption toward income taxes have had a negative impact on GDP growth rates in developing countries. This negative effect is of greater magnitude through personal income taxes (PIC). Consequently, this study provides new evidence of potentially harmful effect of trade liberalisation on the GDP growth rates. The study also gives a clear picture of low tax reliance on indirect taxes between in low-income countries.
Revenue neutral shifts away from trade taxes to consumption taxes have no negative effect on growth. However, revenue neutral shifts towards income, specifically personal income taxes are potentially harmful to GDP growth rates. Key findings hold following the exclusion of resource-rich countries and after controlling for degree of openness.
This paper investigates the relationship between tax structures and economic growth in a panel of developed and developing countries, using the new ICTD GRD. It sought to understand the effects of tax structure on GDP growth, since many previous studies have only focused on OECD countries.
It is also motivated by the IMF Policy prescription (IMF 2011), of on-going shift from reliance on trade taxes to VAT, especially in low income countries. It further sought to understand the implications of such structural shifts with studies showing that revenue recovery following trade liberalisation has been poor in low- and middle- income countries (Baunsgaard & Keen, 2010).
Results suggest that shifts away from trade and consumption toward income taxes have had a negative impact on GDP growth rates in developing countries. This negative effect is of greater magnitude through personal income taxes (PIC). Consequently, this study provides new evidence of potentially harmful effect of trade liberalisation on the GDP growth rates. The study also gives a clear picture of low tax reliance on indirect taxes between in low-income countries.
Revenue neutral shifts away from trade taxes to consumption taxes have no negative effect on growth. However, revenue neutral shifts towards income, specifically personal income taxes are potentially harmful to GDP growth rates. Key findings hold following the exclusion of resource-rich countries and after controlling for degree of openness.
_Disadvantages of Value Added Tax (VAT)_ Burden, Cost of Living, Complexity, ...FarihaSaddique
In this video we are going to introduce you "Disadvantages of Value Added Tax (VAT): Burden, Cost of Living, Complexity, Evasion, and Competitiveness"
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Value Added tax (VAT) – in View of BangladeshIOSRJBM
This paper represents an overview of Value Added Tax (VAT) in Bangladesh. It depicts the basic features of Value Added Tax and its implication, and importance in the growing economy of Bangladesh. Bangladesh faces many problems in raising sufficient tax revenues to fund its economic and social development. To address this problem and to improve economic efficiency and growth, a major tax reform program was initiated in 1991 which centered on the introduction of a value-added tax (VAT) to replace a range of narrowlybased consumption taxes. This study works as a linkage between theory and practice on Value Added Tax. The article represents the social and economical development of the country with the basic awareness which is going at a steady pace among the people and the organization considering it as a key to further economical development. The awareness of Value Added Tax (VAT) is not very old, but still within a short span of time it has shown a remarkable change in the corporate sector and the economy of the country. It has developed a complete sense of care and responsibility towards the country and the welfare of the people.
Five broad principles guide AARP’s evaluation of tax options. Propos.pdfaswrd
Five broad principles guide AARP’s evaluation of tax options. Proposals to reform the tax code,
stimulate the economy, raise additional revenue for any purpose, or modify specific tax
provisions should take into account these principles. Equity—Revenue-raising methods should
consider people’s ability to pay and should, to the extent possible, achieve vertical and horizontal
equity. Taxation should be progressive, and people with comparable incomes should be taxed at
comparable rates. Taxes may also be related to benefits derived from government services.
Economic neutrality—Taxes should be as neutral as possible in their treatment of economic
activity and should not unduly encourage behavior undertaken simply to avoid taxation. Often
this can be achieved by a combination of a broad taxable base and a low tax rate. In addition
taxes should not unduly hinder economic growth, induce inflation, or discourage savings. Taxes
may be used to mitigate economic costs imposed on society that were not fully captured through
market prices. Administrative efficiency—Taxes should be simple for taxpayers to understand
and comply with, and as easy as possible to administer. The need to collect data on taxpayers and
enforce tax laws should be balanced against the protection of individual liberties and privacy.
Revenue—The tax system must produce sufficient revenue to pay for important national, state,
and local priorities and maintain fiscal stability. Stable and reliable public policies and programs
require adequate and consistent sources of revenue. Social and other policy goals—A balance
must be struck between using the tax system to address social policy goals (through such
measures as tax expenditures or earmarking revenue) and raising adequate revenues simply and
equitably. Sometimes the above principles conflict with each other. In these cases AARP may
weigh the relative importance of each of the key principles. AARP’s position on tax policies take
into account the net fiscal impact of a given policy proposal, not only its tax component.
Economic neutrality—Typically taxes create some inefficiencies by distorting economic choices
and thus people’s behavior in the market. One major goal of most tax reform proposals is to
reduce these distortions and encourage stronger economic growth. Proponents of consumption
taxes note that income taxes encourage consumption over saving. Integrating the individual and
corporate income taxes would reduce distortions that influence how businesses are organized and
how income is transferred from corporations to shareholders. By eliminating certain tax
deductions and other preferences, fundamental restructuring of the current income tax would also
improve the neutrality and efficiency of the tax system. Administrative efficiency—The degree
of administrative complexity depends greatly on the form of the tax. A VAT can have high
administrative costs because it increases the number of taxpayers and requires detailed record
ke.
Costs of taxation and effective tax policiesŞamil Rəşidov
Taxation of costs, now known as Detailed Assessment in English law following the Civil Procedure Act 1998, is a ministerial function performed by a court upon the resolution of case. It involves entering the various costs and their amounts against the party (either the Claimant or Defendant) against whom those costs have been awarded by the court. The itemisation of costs or the subsequent determination of the costs that should be allowed is not a determination of the outcome of the litigation.
how to sell pi coins in South Korea profitably.DOT TECH
Yes. You can sell your pi network coins in South Korea or any other country, by finding a verified pi merchant
What is a verified pi merchant?
Since pi network is not launched yet on any exchange, the only way you can sell pi coins is by selling to a verified pi merchant, and this is because pi network is not launched yet on any exchange and no pre-sale or ico offerings Is done on pi.
Since there is no pre-sale, the only way exchanges can get pi is by buying from miners. So a pi merchant facilitates these transactions by acting as a bridge for both transactions.
How can i find a pi vendor/merchant?
Well for those who haven't traded with a pi merchant or who don't already have one. I will leave the telegram id of my personal pi merchant who i trade pi with.
Tele gram: @Pi_vendor_247
#pi #sell #nigeria #pinetwork #picoins #sellpi #Nigerian #tradepi #pinetworkcoins #sellmypi
Currently pi network is not tradable on binance or any other exchange because we are still in the enclosed mainnet.
Right now the only way to sell pi coins is by trading with a verified merchant.
What is a pi merchant?
A pi merchant is someone verified by pi network team and allowed to barter pi coins for goods and services.
Since pi network is not doing any pre-sale The only way exchanges like binance/huobi or crypto whales can get pi is by buying from miners. And a merchant stands in between the exchanges and the miners.
I will leave the telegram contact of my personal pi merchant. I and my friends has traded more than 6000pi coins successfully
Tele-gram
@Pi_vendor_247
what is the future of Pi Network currency.DOT TECH
The future of the Pi cryptocurrency is uncertain, and its success will depend on several factors. Pi is a relatively new cryptocurrency that aims to be user-friendly and accessible to a wide audience. Here are a few key considerations for its future:
Message: @Pi_vendor_247 on telegram if u want to sell PI COINS.
1. Mainnet Launch: As of my last knowledge update in January 2022, Pi was still in the testnet phase. Its success will depend on a successful transition to a mainnet, where actual transactions can take place.
2. User Adoption: Pi's success will be closely tied to user adoption. The more users who join the network and actively participate, the stronger the ecosystem can become.
3. Utility and Use Cases: For a cryptocurrency to thrive, it must offer utility and practical use cases. The Pi team has talked about various applications, including peer-to-peer transactions, smart contracts, and more. The development and implementation of these features will be essential.
4. Regulatory Environment: The regulatory environment for cryptocurrencies is evolving globally. How Pi navigates and complies with regulations in various jurisdictions will significantly impact its future.
5. Technology Development: The Pi network must continue to develop and improve its technology, security, and scalability to compete with established cryptocurrencies.
6. Community Engagement: The Pi community plays a critical role in its future. Engaged users can help build trust and grow the network.
7. Monetization and Sustainability: The Pi team's monetization strategy, such as fees, partnerships, or other revenue sources, will affect its long-term sustainability.
It's essential to approach Pi or any new cryptocurrency with caution and conduct due diligence. Cryptocurrency investments involve risks, and potential rewards can be uncertain. The success and future of Pi will depend on the collective efforts of its team, community, and the broader cryptocurrency market dynamics. It's advisable to stay updated on Pi's development and follow any updates from the official Pi Network website or announcements from the team.
how can i use my minded pi coins I need some funds.DOT TECH
If you are interested in selling your pi coins, i have a verified pi merchant, who buys pi coins and resell them to exchanges looking forward to hold till mainnet launch.
Because the core team has announced that pi network will not be doing any pre-sale. The only way exchanges like huobi, bitmart and hotbit can get pi is by buying from miners.
Now a merchant stands in between these exchanges and the miners. As a link to make transactions smooth. Because right now in the enclosed mainnet you can't sell pi coins your self. You need the help of a merchant,
i will leave the telegram contact of my personal pi merchant below. 👇 I and my friends has traded more than 3000pi coins with him successfully.
@Pi_vendor_247
Even tho Pi network is not listed on any exchange yet.
Buying/Selling or investing in pi network coins is highly possible through the help of vendors. You can buy from vendors[ buy directly from the pi network miners and resell it]. I will leave the telegram contact of my personal vendor.
@Pi_vendor_247
when will pi network coin be available on crypto exchange.DOT TECH
There is no set date for when Pi coins will enter the market.
However, the developers are working hard to get them released as soon as possible.
Once they are available, users will be able to exchange other cryptocurrencies for Pi coins on designated exchanges.
But for now the only way to sell your pi coins is through verified pi vendor.
Here is the telegram contact of my personal pi vendor
@Pi_vendor_247
The European Unemployment Puzzle: implications from population agingGRAPE
We study the link between the evolving age structure of the working population and unemployment. We build a large new Keynesian OLG model with a realistic age structure, labor market frictions, sticky prices, and aggregate shocks. Once calibrated to the European economy, we quantify the extent to which demographic changes over the last three decades have contributed to the decline of the unemployment rate. Our findings yield important implications for the future evolution of unemployment given the anticipated further aging of the working population in Europe. We also quantify the implications for optimal monetary policy: lowering inflation volatility becomes less costly in terms of GDP and unemployment volatility, which hints that optimal monetary policy may be more hawkish in an aging society. Finally, our results also propose a partial reversal of the European-US unemployment puzzle due to the fact that the share of young workers is expected to remain robust in the US.
where can I find a legit pi merchant onlineDOT TECH
Yes. This is very easy what you need is a recommendation from someone who has successfully traded pi coins before with a merchant.
Who is a pi merchant?
A pi merchant is someone who buys pi network coins and resell them to Investors looking forward to hold thousands of pi coins before the open mainnet.
I will leave the telegram contact of my personal pi merchant to trade with
@Pi_vendor_247
what is the best method to sell pi coins in 2024DOT TECH
The best way to sell your pi coins safely is trading with an exchange..but since pi is not launched in any exchange, and second option is through a VERIFIED pi merchant.
Who is a pi merchant?
A pi merchant is someone who buys pi coins from miners and pioneers and resell them to Investors looking forward to hold massive amounts before mainnet launch in 2026.
I will leave the telegram contact of my personal pi merchant to trade pi coins with.
@Pi_vendor_247
Abhay Bhutada Leads Poonawalla Fincorp To Record Low NPA And Unprecedented Gr...Vighnesh Shashtri
Under the leadership of Abhay Bhutada, Poonawalla Fincorp has achieved record-low Non-Performing Assets (NPA) and witnessed unprecedented growth. Bhutada's strategic vision and effective management have significantly enhanced the company's financial health, showcasing a robust performance in the financial sector. This achievement underscores the company's resilience and ability to thrive in a competitive market, setting a new benchmark for operational excellence in the industry.
If you are looking for a pi coin investor. Then look no further because I have the right one he is a pi vendor (he buy and resell to whales in China). I met him on a crypto conference and ever since I and my friends have sold more than 10k pi coins to him And he bought all and still want more. I will drop his telegram handle below just send him a message.
@Pi_vendor_247
how to swap pi coins to foreign currency withdrawable.DOT TECH
As of my last update, Pi is still in the testing phase and is not tradable on any exchanges.
However, Pi Network has announced plans to launch its Testnet and Mainnet in the future, which may include listing Pi on exchanges.
The current method for selling pi coins involves exchanging them with a pi vendor who purchases pi coins for investment reasons.
If you want to sell your pi coins, reach out to a pi vendor and sell them to anyone looking to sell pi coins from any country around the globe.
Below is the contact information for my personal pi vendor.
Telegram: @Pi_vendor_247
how to swap pi coins to foreign currency withdrawable.
Ecs3704 notes- ch-10
1. 1
Public Economics 3
Summary notes: Black et al, Chapter 10
Tax efficiency and tax reform
Learning objective
Explain what is meant by tax efficiency
Compare the excess burden of different taxes
using indifference curve analysis
Determine the magnitude of excess burden using
the consumer surplus concept
Explain the meaning of administrative efficiency
and how it can be achieved
Define tax flexibility
Distinguish between patterns of taxation in DCs
and LDCs
Identify the direction of international tax reform
2. 2
10.1 Excess burden of taxation: Indifference
curve analysis
In addition to direct burden of a tax, there is an excess
burden (deadweight loss/welfare cost).
To use an extreme example: a good taxed so heavily that
the consumption of the good falls to zero. The tax
generated falls to zero. Excess burden would be the utility
loss of consumers.
Two ways to tackle the problem:
Indifference curve approach, and
Consumer surplus approach
10.1.1 Lump-sum taxes
Lump-sum tax is a fixed amount of tax e.g. a poll/head tax.
The most efficient tax – no excess burden. Why?
Does not distort relative prices and therefore people’s
choices - simply reduces total income. (Can’t avoid it by
changing consumption patterns/ working less.)
Big disadvantage – regressive, and hence, fiercely resented.
Note: trade-off between equity and efficiency.
3. 3
See Figure 10.1, p. 139.
Initially - budget line AB, equilibrium E0.
In a two-commodity world, with fixed budget (slope gives
relative prices), a lump-sum tax is levied.
This shifts the budget line inwards to CD, and new
equilibrium at E1. A parallel shift because relative prices
unchanged.
Consumer is worse off because consumption on a lower
indifference curve U1. But still Pareto-optimal.
No excess burden (only normal burden of lump-sum tax)
4. 4
10.1.2 Selective taxes
Now introduce a selective tax on one good – X. Relative
prices distorted.
Budget line swivels to AF – price of X has increased, price
of Y unchanged. Consumer can buy less of X given
income. Utility level falls to U2, equilibrium E2.
Difference between utility U1 (when a lump-sum tax is
introduced) and U2 represents excess burden.
Assuming the tax is borne fully by consumers, then, in
formal terms, the Pareto condition MRSxy = MRTxy is
breached because:
for consumers, the MRS of X for Y is equal to the
after-tax price ratios,
whereas for producers MRT of X into Y is equal to the
before-tax price ratio.
10.1.3 General taxes
General taxes do not distort relative prices – as long as
there are no exemptions, all prices are raised by equal
proportional amounts.
Budget line shifts in to CD and equilibrium at E1.
After-tax price ratio is the same as the before-tax ratio.
Still Pareto-efficient. They are like lump-sum taxes, no
excess burden and equally regressive.
5. 5
10.2 Excess burden: Consumer surplus
approach
10.2.1 The magnitude of the excess burden
Having shown the excess burden effects of general versus
selective taxes, we now move to the question of measuring
the extent of excess burden.
The consumer surplus approach is illustrated in Figure
10.2, p. 142. Partial equilibrium framework – unit
(selective) tax on butter.
Simplify by assuming constant-cost production (horizontal
supply curves). Ordinary demand curves are used.
6. 6
Tax raises supply price. Consumer surplus falls from
ACE to ABF.
Revenue raised (number of units sold multiplied by tax per
unit) – FBDE, is smaller than the loss of consumer surplus
– FBCE. The triangle BCD represents excess burden.
A tax on butter causes a reallocation of resources to the
production of goods without a tax – BCD measures the
welfare loss caused by this misallocation.
The size of the triangle is determined by the price
elasticities of demand and supply and the tax rate.
10.2.2 Price elasticities
The effect of differing elasticities is illustrated in Figure
10.3, p. 143. The steep (less elastic) demand curve, D1
generates a much smaller excess burden (GCH) than D0
(BCD).
This gives rise to the inverse elasticity rule – it is more
efficient to impose taxes on price inelastic goods and
services than on elastic ones.
This ignores distributional implications – demand for
necessities (e.g. bread) often inelastic – poor suffer.
Again, the efficiency/equity trade-off must be faced.
7. 7
Black et al derive an equation [10.4] for the magnitude of
excess burden, which shows it to be a function of three
variables:
Eb = ½ t2
PQ
Where = price elasticity of demand
t = the tax rate
PQ = amount spent on the commodity before tax
So:
the more inelastic the demand (the lower ), the
smaller the excess burden
the higher the tax rate t, the higher the excess
burden, and
the more spent on the commodity (the higher
PQ), the higher the excess burden.
8. 8
10.2.3 The tax rate
See Figure 10.4, p. 145. Initial equilibrium is Pb and Q0.
Tax t1 creates excess burden of BCD. A larger tax t2 creates
excess burden of ACH. The tax doubled but the excess
burden more than doubled. Excess burden increases by a
multiple of the tax rate.
Conclusion: low tax rates on a broad range of commodities
are more efficient than high taxes on a few commodities
yielding equal revenue.
So, VAT is more efficient than most other selective
commodity taxes that could be devised.
9. 9
10.3 Administrative efficiency
Excess burden is not the only cost of a tax – administration
is expensive as well. In SA, where efficiencies of
collection have improved dramatically since SARS was
first created, administration costs are about 1% of total
revenue – this is low.
Compliance costs (born by taxpayers rather than the govt.)
– form-filling plus hiring tax experts. No figures for SA.
Estimated at 5-7% of revenue from income taxes in USA,
and about 2.5% of GDP in New Zealand.
Administrative efficiency entails minimising both
compliance and administrative costs.
Tax avoidance. Legitimate action taken using loopholes in
tax system to minimise tax liability – wasteful in sense that
individuals make decisions based on tax, rather than
economic, considerations.
Tax evasion. Illegal activities such as under-reporting
income and claiming higher deductions.
So, good tax administration also means minimising tax
avoidance and tax evasion.
Golden rule for tax design is simplification.
Incentives for tax delinquency should be minimised,
and penalties for evasion high.
10. 10
Collection is improved if taxes are withheld at source.
PAYE for e.g. (trade-off between administrative and
compliance costs though – costs on private sector)
Tax morality affects collection – acceptability of
system depends on perceptions of it’s fairness.
Tax efficiency also affected by political will to
enforce tax laws (very high in SA – major
improvements in SARS in collection).
Taxes should be certain (implies little or no discretion
on part of payer or receiver) and transparent
(government should not take advantage of people’s
ignorance, tax decisions openly debated).
10.4 Flexibility
Taxes should be flexible enough to provide for changing
economic conditions.
Flexibility of tax structures allows govt. to manipulate
supply-side variables to affect economic growth –
changing the incentive for individuals to work and
spend/save.
Demand-side measures to smooth out business cycles -
stabilisation policy. Two forms of intervention recognised:
discretionary and automatic stabilisers. For the former
timing is crucial. The latter are characterised by built-in
flexibility, e.g. progressive income tax system (average tax
payments rise during boom and fall during recession).
11. 11
10.5 Tax reform: International experience
Various motivations for change: political, ideological, need
to reduce budget deficit, redistribute income, tax
simplification, response to international trends
10.5.1 Patterns of taxation in developed and less-
developed countries
Total tax burden greater in DCs than LDCs (30.4% vs
15.3% of GDP)
Composition:
Direct higher in DCs – 69.2%
Indirect higher in LDCs – 51.9%
Tax on individuals in DCs – 28.4%
On companies – 8.3%
Two sources roughly equally important in LDCs - 16%
LDCs rely heavily on VAT and GST – 27.9%
Trades taxes in DCs – 0.5%
In LDCs – 9.2%
SA mixed – mimics LDC taxes on goods and services, but
Personal Income Tax bigger than DCs – 40.9% (vs 28.4%)
See Table 10.1, p.149.
12. 12
10.5.2 International tax reform
Look briefly at directions in tax reform in LDCs.
Re-appraisal of distributive role of taxes – declining
role. Taxes should at least not make poor people
poorer – rather use expenditure side to redistribute.
Efforts to broaden the tax base and reduce tax rates
at the same time - to reduce distortions/excess burden
(by e.g. imposing a more general tax like VAT)
Improvements in tax administration (through
simplification of taxes esp.)
Lower tax rates and more uniform tax rates (e.g. 14%
VAT) – worldwide phenomenon of last decade (has
accompanied economic globalisation).
10.5.3 Globalisation and tax reform
Greater integration across countries – led to greater
competition. A country’s tax system can no longer be
considered independently from the rest of the world.
Cross-border shopping – attract foreign consumers by
lowering taxes on high-value products
Multi-nationals can shift profits from high to low tax
jurisdictions (countries compete to attract these firms).
13. 13
People can evade domestic taxes on savings by
shifting to tax havens around the world.
Forces rates internationally towards equality
Future of tax systems? Lower company tax and higher
property tax (immobile asset)?
10.6 Tax reform in South Africa
Franzsen (1968)
Margo (1987)
Katz (1994-99)