Modelling value-added tax in the presence of multi-production and differentiated exemptions

We develop a framework for economy-wide modelling of value-added tax systems. Our framework models a number of complexities of VAT systems as implemented by tax agencies. In particular, we model multiple rates, multiple exemptions, multiple degrees of refundability across commodity users, and multi-product enterprises. We use our framework to model what is arguably South East Asia's most complex VAT system: that of Vietnam. We analyse the macroeconomic, industrial and distributional effects of simplifying Vietnam's complex VAT system. We simplify the system via a budget-neutral movement to one rate and removal of discretionary exemptions. This generates an aggregate welfare gain, but adverse distributional effects. Adverse distributional effects can be greatly ameliorated, at small cost to the aggregate welfare gain, via exclusion of paddy and rice from the VAT simplification program.     

Proposed changes to the value added tax: implications for tax revenue and price distortions

This paper examines changes to the value added tax (VAT) system proposed recently by the Indonesian Ministry of Finance-in particular that the exemptions for certain sectors be ended. Using the input-output relationships in the economy as a basis, it analyses the implications of these changes for tax revenue and for price distortions. It also considers other feasible changes to the VAT exemptions that could be advantageous. The paper concludes that the estimated revenue impacts of the proposed changes are small relative to the apparent scope for revenue increases from improved administration of the system as it stands.     

Considering the efficacy of value-added tax zero-rating as pro-poor policy: The case of South Africa

The use of value-added tax (VAT) zero-rating has become widely accepted internationally to mitigate the regressivity of the tax. From an economic perspective, it remains contestable whether VAT zero-rating is the most cost-effective way of targeting the poor. This article addresses some topical issues on VAT zero-rating in South Africa. We first ask whether (conceptually) zero-rating should be a consideration within the context of tax theory literature, and then quantify the impact on the poor if zero-rating was to be removed, as well as the tax revenue implications thereof. We compare the cost of VAT zero-rating with the benefit, using data sourced from the Income and Expenditure Survey 2010/11 and the Estimates of National Expenditure. Our findings show that VAT zero-rating (compared with existing social transfer programmes) is not cost-effective when targeting the poor.     

China's value-added tax reform, capital accumulation, and welfare implications

This paper analyzes the effects of China's upcoming value-added tax (VAT) reform of removing investment from the tax base on capital accumulation and the welfare of the rich and the poor. Three alternative methods to make up for the loss of tax revenue are considered. The VAT reform with consumption tax being endogenous increases capital accumulation and the utility of both the rich and the poor. The VAT reform with the labor income tax rate being endogenous increases capital accumulation; and it decreases the utility of the rich and increases the utility of the poor (increases the utility of both the rich and the poor) if the rich has a higher rate or the same rate of time preference (if the rich has a lower rate of time preference). The VAT reform, accompanied by a cut in transfers to the poor, has no effect on capital accumulation if the rich and the poor have the same rate of time preference; it decreases (increases) capital accumulation if the rich has a higher (lower) rate of time preference; and it increases the utility of the rich and decreases the utility of the poor.     

Sales tax exemptions and credits: Time to reevaluate

The state sales tax is an inherently regressive source of revenue. This has given rise to attempts to counter the regressivity through adjustments to the basic sales tax structure through credits and exemptions. Two new alternatives appear to have both theoretical and practical advantages over simple credits and exemptions: the use of a debit card for delivering sales tax credits and a negative credit related to potential tax liability. They have the theoretical advantages of both the credit and the exemption while not having the administrative difficulties of the credit or the revenue loss of the exemption. Empirical analysis using the Consumer Expenditure Survey and the Maryland tax code indicates that the state can reduce regressivity and raise substantial revenue using either alternative. The proposed gains can be made with enhanced revenue stability, little administrative cost, and little impact on horizontal equity or efficiency.     

ADOPTING A VALUE-ADDED TAX IN A DEVELOPING COUNTRY*

There are many decisions points to consider once a government has decided to put in place a value added tax. Some of these decisions pre-determine other decisions. In particular, most countries have chosen this VAT to be most suitable: consumption type of VAT designed along the destination principle, and collected by the credit method. Other features tend to be more variable depending on the countries concerned. Most countries would want to adopt the comprehensive VAT, down to the retail level, but practical considerations would necessitate the introduction only of the pre-retail VAT. The VAT may have a narrower coverage of sectors because of the limitations related to special conditions of small establishments, especially in developing countries and because of the stage of economic activity covered. When these are taken into account, through the technique of exemption, the VAT would tend to be applicable to the more formal sector of the economy that is composed of larger establishments. The simplest VAT would be conceived with a single rate, but intermediate rates may be introduced to accommodate the need to meet social considerations on the burden of the tax. Finally, although this paper dealt with the issues about the introduction of a VAT, the same issues would loom large in any improvements designed to broaden the coverage of an existing VAT. It is likely that the most basic choices will have to be committed at the point of introduction. In that respect, there is some irreversibility in the choice of the type of VAT, the principle upon which it is based, and the method of collecting it. Room for improvement will take place essentially in the coverage of the tax. For instance, this can be in terms of the following: movement towards the comprehensive VAT, in the case of a decision in favor of a pre-retail level VAT; increase in the coverage of sectors where before the horizontal coverage is narrow; and changes in the level of the tax rate.     

增值税扩围改革有助于减轻服务业税负吗?——基于投入产出表的分析

增值税扩围改革对服务业行业流转税负担的影响同时包含"税率提高的增税效应"与"进项抵扣的减税效应"。利用投入产出表数据,分析并测算了增值税扩围改革影响各服务业行业流转税负变动的净效应,结果发现:不同服务业行业的税负变化情况差异较大,商务服务业等大多数行业的税负将减轻,但租赁业等部分行业的税负可能会加重,税改后的增值税税率水平选择与中间投入比率是影响服务业行业税负变动的主要因素。为了优化服务业发展的税收环境,使增值税扩围改革有助于减轻服务业的流转税负,应根据税负平衡点审慎选择服务业行业税改后适用的增值税税率。当前制定的租赁业、交通运输业的试点税率水平偏高,有必要降低。     

An Efficiency Analysis of Proposed State and Local Sales Tax Reforms

With few exceptions, state and local general sales and use taxes are levied primarily on tangible goods. Secular trends in production and consumption of goods and services, as well as legislated exemptions and exclusions, have eroded sales tax bases. A number of reforms designed to reduce base erosion have been proposed, including base broadening, conversion to a consumption tax, and wholesale replacement of sales taxes with income taxes. Each proposal has potential to shore up sales tax bases. From an economic perspective, the policy choice should turn on efficiency, equity, and simplicity. This paper reports on a computer analysis of efficiency effects. The results suggest that (i) base broadening can increase economic efficiency, (ii) converting to a consumption tax base dominates base broadening, (iii) replacing sales taxes with higher income taxes could produce large efficiency losses, (iv) base broadening could generate efficiency gains even if untaxed remote sales become a “sizable” fraction of total sales, and (v) even partial base broadening could produce sizable efficiency improvements.     

“营改增”对软件服务业研发创新的影响研究

以“营改增”这一重大税制改革为切入点,基于创新驱动发展、引领经济社会转型的视角,选取2010—2013年沪深两市A股主板软件服务业企业为样本,运用双重差分模型实证考察了“营改增”对软件服务业研发创新的影响。实证结果表明：“营改增”的实施对我国软件服务业的研发创新活动起到了一定的促进作用,且与非试点地区相比,在“营改增”试点地区样本企业的研发强度有显著地提高。最后针对这些问题进一步分析了原因并提出相应的建议。     

Comparing marginal commodity tax reforms in Japan and Korea

We examine the impact of the marginal commodity tax reforms in Japan and Korea, using data from the official household surveys of the two countries. Based on the estimations of two demand systems (linear expenditure system (LES) and almost ideal demand system(AIDS)), we compare the marginal costs of taxing major commodity groups, examine distributive gains from tax reforms based on concentration curves, and assess the impact on poverty based on consumption dominance curves. In particular, we find that revenue-neutral marginal tax reforms incorporating a reduced tax on food and beverages are more likely to face an efficiency–equity trade-off in Korea than in Japan.     

“营改增”倒逼消费税改革

在"营改增"不断推进的大背景下,为调整央地税制关系,稳定地方税源,消费税改革的呼声日益高涨。我国现行消费税虽历经了两次调整,但其现行税制仍不能适应升级了的消费结构,其征税范围需有增有减的调整,征税环节也需从生产环节下移,为弥补"营改增"为地方政府带来的空缺,可培养消费税为地方税主力。     

The rise and decline of industrial foundations as controlling owners of Swedish listed firms: the role of tax incentives

ABSTRACT

Beginning in the interwar period, industrial foundations became a vehicle for corporate control of large listed firms in Sweden. In the 1990s they were replaced by wealthy individuals who either directly own controlling blocks or who own them through holding companies. We study potential explanations for this change and propose two tax-related candidates: shifts in the relative effective taxation across owner types and the dismantling of inheritance taxation that prevented the generational transfer of the ownership of large controlling blocks. We exploit newly computed marginal effective capital income tax rates across capital owners, accounting for all relevant factors, including rules governing tax exemptions. We show that the 1990–91 tax reform, abolition of the wealth tax for controlling owners in 1997, 2003 tax exemption of dividends and capital gains on listed stock for holding companies with a voting or equity share of at least 10 percent, and abolition of the inheritance and gift taxes in 2004 reversed the rules of the game. Recently, control has largely been wielded through direct ownership, and the role of foundations is rapidly declining. These findings point to the importance of tax incentives for the use of foundations as the control vehicle of listed firms.     

The Stagnant Export Upgrading in Northeast China: Evidence from Value‐added Tax Reform

China's 2004 value‐added tax (VAT) pilot reform in the Northeast region, which changed the VAT from production type to consumption type, introduced a sizable tax credit for fixed investment in manufacturing industries, leading to more investment and higher productivity at firm level. This paper, however, uses difference‐in‐difference estimation and finds a negative structural effect; that is, the VAT pilot reform leads to a reduction in the export sophistication of Northeast cities relative to other cities in China, and the results hold for a battery of robustness checks. It is found that resources are reallocated towards less‐sophisticated industries. As the products with higher export sophistication are more skill and research and development (R&D) intensive, the shortfalls of skilled labor and R&D spending hinder the upgrading process. With a new round of revitalization plans in the Northeast, policymakers should be cautious with similar structural effects and focus on increasing skilled labor supply and R&D investment.     

基于采购视角的建筑业增值税税收筹划

自正式实施"营改增"政策以来,中国建筑业涉及的主体流转税从营业税转化为增值税,对建筑业产生较大的影响.在经营过程中,建筑业通过选择拆分合同项目、选择甲供工程的计税方法、选择物料的供货渠道以及选择劳务用工形式进行采购环节的税收筹划,以减轻整体税负,促进自身可持续发展.     

National and Regional Impacts of an Increase in Value-Added Tax: A CGE Analysis for South Africa

The South African National Treasury expected a revenue shortfall of R48.2 billion in 2017/18 and proposed tax policy measures to raise an additional R36 billion in 2018/19. A key component to raise the additional revenue was a 1% point increase in the VAT rate to 15% effective from 1 April 2018. The increase in the VAT rate was not welcomed as it would increase the cost of living, especially for the poor. We investigate the potential economy-wide and regional impacts of raising VAT and increasing public spending on education and health. We do this by developing and applying a multi-regional model of the South African economy that includes detailed tax and spending features. In this model, when we increase VAT, the impacts are driven by the direct shock to the model, accompanied by differences in regional economic activity. We find that effects on GDP vary between regions but are generally negative.     

增值税转型对珠三角的影响分析

我国自2009年1月1日起,在全国所有地区、所有行业推行增值税转型改革,改革的核心是扩大了增值税的抵扣范围,这对企业来说是一大利好,但对财政收入则是直接减少税收。本文主要从企业、财政收入和就业三个角度分析了增值税转型对珠三角的影响,在此基础上,提出了关于未来增值税改革的几点意见。     

A general equilibrium model of Value Added Tax evasion: an application to Pakistan

International Economics and Economic Policy - Value Added Taxes (VAT) constitute a major share of tax revenues in developing countries in which tax evasion is widespread. The literature on VAT...     

VALUE-ADDED TAX IN A BORDERLESS SA-BLNS REGION

Market integration and the abolition of border controls increase the mobility of consumers and cross‐border shopping. This makes it difficult to maintain a destination‐based VAT. Because of differences in the size of countries, governments of different sizes may engage in inefficient tax competition. Such externalities result in a call for tax coordination and a review of VAT regimes most suitable to a globalised world. One of the ultimate objectives of an African Union is a single market. This paper introduces the potential VAT policy implications of further economic integration within Southern Africa as a prelude to an African Economic Community, drawing on the experience of the EU in particular. When the critical factors that may impact on VAT policy are viewed together with SACU's long history of customs cooperation, a form of clearing‐house regime seems appropriate. However, this may not be politically appropriate, thus clearing the way for a more conventional approach, such as the transitional EU‐VAT regime.     

税收优惠对先进制造业集群创新的影响

选取2006—2021年我国A股上市公司作为样本,选取19个省市的先进制造业15个具有代表性的行业数据,研究税收优惠如何影响先进制造业集群创新水平。研究发现：税收优惠与先进制造业集群创新水平呈正向关系,增值税优惠影响更大;非国企税收优惠对创新的影响大于国企,且更显著;税收优惠对先进制造业集群创新存在滞后性,企业需要时间充分利用政策进行创新。鉴于此,应坚持实施税收优惠,重点强化非国企税收优惠,精准把控税收优惠滞后性。     

“营改增”、制造业服务化与全要素生产率提升——基于DI合成控制法的实证研究

文章使用上市公司2007-2016年制造业企业面板数据,运用DI合成控制法和中介效应模型,实证检验了"营改增"对制造业全要素生产率的直接影响及"营改增"通过制造业服务化对全要素生产率的间接影响。结果表明："营改增"政策主要通过直接作用提高制造业全要素生产率,经由制造业服务化来提高制造业全要素生产率的中介作用并不存在。文章的研究对"营改增"政策完善与制造业转型升级具有一定的启示。