The Economics of a Reduction in VAT*

We explore the effects of a temporary cut in VAT, identifying three possible effects: an income effect as people benefit from a lower cost of living during the period of the reduction, a substitution effect as people bring their consumption forward and an arbitrage effect as people buy non‐perishable goods before the end of the period of low VAT for consumption after the VAT rate has been raised. International evidence suggests a clear overall impact on consumption, although the nature of the pattern depends on the way in which the data are analysed. However, the key policy issue is the impact of the VAT change on output and, to examine that, a simulation model of the whole economy is needed. Evidence from the National Institute's Global Economic Model suggests that the impact of the recent VAT reduction is likely to build up during the course of 2009. The reduction in VAT from 17½ per cent to 15 per cent is likely to result in consumption being augmented by less than 1 per cent by the fourth quarter of 2009. However, GDP is likely to be raised by less than half a per cent relative to what would have happened without the VAT increase. After the temporary reduction is over, both consumption and GDP are depressed as a result of the policy.     

The Economics of a Temporary VAT Cut*

This paper analyses the likely implications of the temporary cut in VAT in the UK to 15 per cent, with a return to 17.5 per cent in place for the end of 2009. We distinguish between the income effect of the cut and the (intertemporal) substitution effect. The former is likely to be small because the change in lifetime income is minimal. The second effect is likely to be much more important because the reduction in the price of goods bought in 2009 compared with 2010 gives an incentive to increase consumer spending this year. With an elasticity of intertemporal substitution of about 1, we would expect the cut in VAT to boost consumer spending by about 1.2 per cent over what it would otherwise be. The distributional consequences of the VAT cut are regressive because goods subject to VAT tend to be luxuries. Unlike a cut in interest rates, there is no difference in the distributional consequences for borrowers compared with savers.     

Is a Tax Cut on Cultural Goods Consumption Actually Desirable? A Microsimulation Analysis applied to Spain*

Proposals for tax cuts on cultural goods represent an ongoing debate in cultural policy. The main aim of this paper is to shed some light on this debate using microsimulation tools. First, we have estimated an Almost Ideal Demand System for 19 different groups of goods, including cultural goods. Expenditure and price elasticities have been obtained from this model. Using this information, three alternative cuts in the VAT rate on cultural goods have been microsimulated and evaluated in terms of revenue and welfare. These types of fiscal reforms will lead to welfare and efficiency gains that can be described as regressive.     

A Proposal to Improve the VAT Treatment of Housing in the European Union*

The treatment of housing is one of the most difficult issues under the VATs in the EU. Ideally, rents and rental values should be taxed just like other consumer goods and services, but doing so would present formidable practical and political difficulties. Under a second‐best approach, the value of newly created residential (and other) property is taxed as a proxy for the VAT that should be payable on the flow of housing (building) services. This implies, however, that future increases (and decreases) in the value of the exempt property are left out of the VAT base. To remedy this defect, this paper recommends taxing the increases (refunding the tax related to decreases) realised at the time of sale of the exempt used property. This VAT should replace the current transfer, registration and stamp duties, which are highly distortionary. Beyond that, the VATs in various member states can be improved by limiting the exemption for all used immovable property to housing, by taxing land and by applying the standard rate more widely than is currently the case.     

经济政策不确定性如何影响企业出口决策？——基于出口频率的视角

出口频率作为出口决策的重要一环,是企业出口扩张的新边际,也是出口变化的“晴雨表”。本文在随机存货模型的基础上,考察了经济政策不确定性对企业出口频率的影响及其传导渠道,并采用2000-2006年工业企业数据库与海关数据库的匹配数据进行实证检验,结果发现:目的国经济政策不确定性增加会显著降低企业出口频率,且这一影响存在部分惯性效应;经济政策不确定性通过贸易成本、存货成本和市场需求波动共同影响企业出口频率的中介效应十分显著,其中贸易成本是最重要的传导渠道,占比达到19%以上;如果进一步考虑目的国、产品和企业异质性,会发现出口目的国经济发展水平较高、出口产品为中间品和消费品的企业,其出口频率受经济政策不确定性的影响较小。因此,政府和企业应高度关注出口频率的变化趋势,合理应对经济政策不确定性对出口决策的外部冲击。     

A Model of the Confidence Channel of Fiscal Policy

This article presents a simple macroeconomic model where government spending affects aggregate demand directly and indirectly, through an expectational channel. Prices are fully flexible and the model is static, so intertemporal issues play no role. There are three important elements in the model: (i) fixed adjustment costs for investment, which create an inaction zone; (ii) noisy idiosyncratic information about the aggregate economy; and (iii) imperfect substitution among private goods and goods provided by the government. An increase in government spending raises demand for private goods and may prevent a coordination failure. The optimal level of government expenditure is high when the desired level of investment is low, which we interpret as a time of low economic activity.     

VAT and agriculture: lessons from Europe

Little has been written about the treatment of agriculture under the value added tax (VAT). This article attempts to fill the void by surveying and evaluating the situation in the Member States of the European Union (EU) and some other countries. Farmers are often exempted from VAT for administrative and political reasons. But this means that the VAT on their inputs cannot be ‘washed out’ through the tax deduction/credit mechanism. It then has to be borne by the farmers themselves or becomes an indeterminate and capricious element in consumer prices. To compensate farmers for the uncompensated VAT on inputs, the EU has devised a flat-rate scheme that permits them to charge a presumptive rate (approximately equal to the effective VAT rate on sector-wide inputs) on their sales to taxable agro-processing firms which, in turn, are permitted to take a deduction for this flat-rate addition from the VAT on their sales. Obviously, the flat-rate scheme is an arbitrary way of trying to achieve equal treatment between exempt and taxable farmers and between exempt farm products and other taxable goods and services. Full taxation, subject to the general threshold, appears to be the preferred choice.     

Does It Pay to Be Socially Responsible? Evidence from Spain's Retail Banking Sector

This paper extends the research on the relation between financial performance and corporate social responsibility in two respects. First, it develops a model of strategic competition that includes consumer perceptions with respect to firm social performance. It is shown that in the presence of a positive valuation of social responsibility practices by consumers, a firm that endorses this responsible behaviour may obtain a better strategic position in the market, along with higher margin, demand, and profit. Second, the model's predictions are tested with a sample of Spanish banking firms. The empirical analysis confirms that consumers significantly value other features apart from price in making deposit and mortgage decisions, particularly a financial institution's social responsibility. A more disaggregated analysis shows first, that not every CSR dimension has relevance for consumers and second, that customers equally value activities that can have a direct impact on their well‐being (e.g., culture and leisure), as well as other activities that can be viewed more generally as public goods (e.g., heritage and the environment). These conclusions are of interest in the debate about a firm's social or ethical activities. It is shown that, provided that consumers value corporate social responsibility activities, firms can improve both their competitive position in the market and their profits by behaving in a socially responsible manner. Therefore, the design and implementation of corporate social responsibility practices could confer upon firms an initial competitive advantage over their competitors.     

“营改增”影响地方政府税收努力研究

基于随机前沿分析法（SFA）测算2011-2015年我国地方政府税收努力程度,并运用双重差分法考察“营改增”对地方征税行为的影响。研究发现：“营改增”将地方税（营业税）变为共享税（增值税）,显著降低了地方政府税收努力程度;改革对税收努力的冲击受经济发展水平、转移支付额度和税收返还的影响,获取转移支付收入和税收返还越多的地区税收努力下降速度越快。后“营改增”时期,如何提高税收效率,缓解地方财政收入对转移支付和债务收入的依赖性,是理顺中央和地方财税关系,完善财税收入体系的重要问题。     

增值税征收范围与免税范围探讨

从税制原理上看,增值税征收范围应覆盖所有商品和劳务。然而,出于公平、技术、成本等原因,开征增值税的国家普遍对部分商品或服务免征增值税。EU、OECD国家的增值税实践为其他各国的增值税改革提供了重要启示,在借鉴这些国家的成熟经验及结合我国实际情况的基础上,建议我国未来增值税征收范围与免税范围的总体目标为覆盖所有商品和劳务并尽量减少免税项目。     

Automobile replacement: a dynamic structural approach

This article specifies and estimates a structural dynamic model of consumer demand for new and used durable goods. Its primary contribution is to provide an explicit estimation procedure for transaction costs. Identification of transaction costs is achieved from the variation in the share of consumers choosing to hold a given car type each period, and from the share of consumers choosing to purchase the same car type that period. Specifically, I estimate a random‐coefficient discrete‐choice model that incorporates a dynamic optimal stopping problem. I apply this model to evaluate the impact of scrappage subsidies on the Italian automobile market.     

The C-inefficiency of the EU-VAT and what can be done about it

International Tax and Public Finance - It is widely agreed that in countries without major constraints on administrative capacity, a value-added tax (VAT) should tax all goods and services at a...     

台风风险的可保性及其市场供求行为分析

台风灾害每年都给中国东部沿海地区造成巨大的经济损失,但到目前我国保险市场还没有单一责任的台风保险来分担此风险。台风保险是一种准公共物品,如果政府能够介入该保险市场,其可保性则得以提高。对有政府支持的台风保险供求行为博弈分析表明,农户购买台风保险的保险费用占其总产出的百分比在农户和保险公司的决策中至关重要。     

Value-added tax options for India

The pressures of aggregate revenue, the requirement of a reduced role for customs duties for the liberalization of the economy, and the complexity and strains of the current system together point clearly toward the desirability of tax reform in India. Since domestic indirect taxes provide the major source of revenue, they deserve special attention. This paper argues that India would benefit from moving toward a system of value-added taxation (VAT) and focuses on the way in which a VAT (or VATs) can be best introduced into India given the country's federal structure. Three different options are distinguished: a central VAT, dual VAT, and states' VAT. We argue that the first is politically infeasible, that the second represents the best way forward in the short term, and that the third deserves consideration as a long-run option. Special attention is paid to the problems that would arise under either a states' or a dual VAT with regard to taxing interstate trade.     

域外商品与服务税视同应税交易规则解析与中国借鉴

《中华人民共和国增值税法(征求意见稿)》以及《增值税法(送审稿)》将视同应税交易明确限定为货物等用于集体福利或者个人消费和无偿赠送两大类型,相比于加拿大、新加坡、澳大利亚的商品与服务税视同交易规则及替代方案,体现出较大的趋同性.视同应税交易的建构核心在于贯彻增值税中性原则,包括保护纳税人抵扣权、促进课税待遇平等以及避免...     

Zero‐Rating versus Cash Transfers under the VAT

To reduce the tax burden on the poor, nearly every VAT system allows for special treatment of certain goods or services. Zero‐rating the supply of certain foodstuffs is a prominent example of this practice. Using data on South Africa, this paper considers whether taxing foodstuffs alongside compensating cash transfers may be preferred to zero‐rating foodstuffs in a developing country context. The results show that cash transfers may be preferred if all the additional revenue from eliminating the zero rate can be earmarked and government is perfectly efficient. In the likely absence of earmarking and perfect efficiency, developing countries may need to apply special treatment to some foodstuffs to protect the poor. If this is the case, it is proposed that zero‐rating can be preferred to the exemption of certain foodstuffs.     

Response of Tax Credit Claims to Tax Enforcement: Evidence from a Quasi‐Experiment in Chile

Diesel in Chile receives different tax treatments depending on its use. If diesel is used in industrial activities, the diesel taxes paid can be fully used as a credit against VAT, but if it is used in freight or public transportation – basically trucks and buses – only a fraction of diesel taxes paid can be claimed as a tax credit for VAT payments. As a result of this different tax treatment, firms have incentives to use ‘tax‐exempted’ diesel in activities requiring ‘non‐tax‐exempted’ diesel. This tax wedge therefore generates an opportunity for tax evasion, especially for firms with multiple economic activities, one of them being transport. In this paper, we analyse the impact of a tax enforcement programme implemented by the Chilean Internal Revenue Service (IRS), where letters requiring information about diesel purchases and use and vehicle ownership were sent to around 200 firms in 2003. Using different empirical strategies to consider the non‐randomness of the selection of firms, the empirical results show consistently that firms receiving a letter decreased their diesel tax credits by around 10 per cent.     

Prudence, Demand Uncertainty, Background Risk, and the Law of Supply: A Nonexpected Utility Approach to the Firm

We identify two motives, prudence and risk aversion, which give rise to precautionary behavior for a quantity- or price-setting monopolist facing demand uncertainty who has dual theoretic preferences. We also analyze a piecewise linear profit function due to a tax on profits that varies with the profit level. We show that the comparative statics of greater risk (mean-preserving spread and mean-utility preserving spread) can be totally or partially determined by the Diamond-Stiglitz and Kihlstrom-Mirman single-crossing property. For example, for a prudent risk-averse quantity-setting dual theoretic monopolist, a mean-preserving spread will have the same impact on output under uncertainty as a fall in the state of demand under certainty. Finally, we find that, in contrast to expected utility, a stochastically larger state of demand (first-order stochastic dominance) will raise output even if background risk is present.     

经济政策不确定性、地区文化与保险需求

本文在拓展背景风险理论研究的基础上,揭示了经济政策不确定性对保险需求的影响及其受地区文化制约的理论机制。并利用2007-2017年中国30个地区的月度面板数据,检验了经济政策不确定性、地区文化与保险需求间的内在联系。结果发现:第一,经济政策不确定性会对保险需求产生显著正影响,且这种效应在地区人身险需求上表现更明显;第二,将地区文化指标集纳入经济政策不确定性与保险需求关系的研究框架,发现地区文化差异会对经济政策不确定性影响保险需求产生调节效应。因此政府需在充分重视经济政策波动和文化对经济活动的双重影响基础上,加强国内社会保障体系建设,建立更透明的信息传递渠道,培育人们主动抵抗风险的意识和文化习惯,调整保险供给结构,以减少不确定性对社会经济行为的负面冲击。