Optimal fiscal zoning that distorts housing consumption

When entrants to Tiebout-type communities face limited alternatives, local governments possess some monopoly power over the use of land within their boundaries. One way they exercise that power is through fiscal zoning which attempts to extract tax revenues from newcomers in excess of the cost of the local services they consume. Ideally, the community would like to do this by regulating the newcomers' tax bases, but in practice this is impossible. Thus, indirect methods such as minimum lot size zoning are necesary. Since it is not possible to control all inputs into the production of housing, however, zoning is distortionary. This article examines the impact of the distortions of minimum lot size zoning on the ability of local governments to implement fiscal zoning.     

Financing Local Police Spending in England and Wales: Fiscal Federalism in Practice

Since 1995, police forces in England and Wales have been able to raise revenues locally to supplement grants from central government. We analyse the variation across police force areas in locally raised police revenues over the 2000s, and we find that three‐quarters of the temporal and spatial variation in local revenues per head can be explained by differences in incomes, prices and local preferences. A particularly robust parameter is the effective local community tax price associated with raising revenue. We discuss the police funding model in the wider context of fiscal federalism, and we point to alternative funding structures that could be adopted.     

After the death of inflation: will fiscal drag survive?

Declining inflation rates might have negative consequences for tax revenues. Phenomena such as the inflationary bracket creep in a progressive income tax system do not work any longer. With this background, the paper analyses the extent of fiscal drag for OECD countries since 1965. Some consideration of the role of money illusion and indexation in this context lays the theoretical base. A framework is presented that allows for the classification of fiscal structures with regard to the type of fiscal drag. The subsequent econometric panel analysis is performed for total and disaggregated government revenues. The results back theoretical considerations of inflation's impact on different kinds of taxes, which tends to be positive for individual income taxes and social security contributions and is negative for corporate income taxation. The paper concludes that both declining inflation and changing tax structures limit the potential for future fiscal drag.     

税费替代:增值税减税、非税收入征管与企业投资

通过减税促进企业投资和提振宏观经济是近年来中国税收制度改革的重要目标,但减税政策的实际效果却存在争议。本文利用2009年增值税转型改革,研究了减税对地方政府税费收入和企业非税负担的影响,从税费替代的角度揭示非税负担变动如何影响企业固定资产投资。研究发现:(1)增值税转型在减税的同时提高了地方政府非税收入并加重了企业非税负担,地方财政收入受增值税转型冲击越大,企业非税负担上升越明显。(2)上述应主要体现在小型、微型和民营企业上,大中型、非民营企业的非税负担未发生明显变化。(3)非税负担上升会显著抑制小型、微型和民营企业的固定资产投资,促使小型微型和民营企业通过持有更多现金和减少流动性负债来应对税费负担不确定性。本文有助于理解减税政策对小型微型和民营企业非税负担的溢出效应及其影响,为通过减税降费促进投资和提振经济提供经验支撑。     

Fiscal Externalities and Efficient Transfers in a Federation

This paper investigates properties of the second best allocation in a fiscal federal system in which both federal tax and intergovernmental grants are involved and the taxation is distortionary. Also, optimal federal grants and tax policies in a decentralized fiscal system are examined. Our major findings are: (i) the second best does not require the equalization of marginal cost of public funds across regions in a conventional form; (ii) matching grants based on either the local tax rates or tax revenues should be introduced to internalize the tax externality; and (iii) once lump-sum and matching grants are optimized, federal tax policy becomes redundant so the optimal fiscal gap is indeterminate.     

分税与地方财政支出结构

本文研究了税收分成对地方财政支出结构的影响。理论分析发现,在地方政府的财政支出结构竞争中,税收分成比例的提高将直接导致地方政府增加生产性公共支出,发挥生产性支出的产出外部性,提高产出水平和自身税收收入水平,实现福利最大化。一系列经验分析显著地验证了上述结论,即当地级市政府的税收分成率提高10%,该地区生产性支出占比将提高1.39%。本文的分析和结论有助于解释中国地方财政支出结构变动的原因,从而为政府间税收分配改革提供有效的政策建议。     

消费税向地方税转型的改革研究

2019年9月26日国务院印发的《实施更大规模减税降费后调整中央与地方收入划分改革推进方案》明确了消费税的改革方案为"后移消费税征收环节并稳步下划地方"。本文以该方案为基础,讨论了消费税改革的理论争议与改革导向;利用《中国税务年鉴》《中国贸易外经统计年鉴》等相关数据测算分析了不同征收环节下消费税收入的地区分布,发现消费税后移征收环节及下划地方后会产生新的消费税收入分配不均衡问题;测算分析了"定基数、调增量"改革对地方财政收入的短期影响,发现短期内部分地区会出现"保基数"问题。基于此,本文提出了以完善央地间财政关系、健全地方税体系为导向的消费税转型改革建议。     

The real impact of a one-off fiscal restriction: empirical evidence of a flypaper effect in Flemish municipalities

This paper analyses the effects of a one-off fiscal restriction on Flemish local government spending. The authors provide evidence of a ‘flypaper effect’: fiscal restriction stimulated the sensitivity of local spending to grants. This means that higher-level governments (regional/national/supranational) need to take a flypaper effect into account when considering one-off fiscal restrictions on lower-level governments.     

中国房地产税改革分析与建议

本文首先论述中国推进房地产税制改革的必要性和社会基础,然后分析中国房地产税改革和实施的困难与阻力,尤其是社会对房地产税的认识误区,比如对房地产税本质的认识,与土地出让金的混淆等,进而论述房地产税的功能、改革的目标和目的,最后提出房地产税制改革的建议.本文突出强调房地产税改革的近期目标应该以税制自身的改革、税制现代化,以及税制与社会发展相适应为目的,而地方财政收入功能应该放到长期的目标中.建议国家采取"中央定调子,地方定方案"的策略推进房地产税改革.     

The interactive effect of revenue diversification and economic base on US local government revenue stability

Over the past 50 years, revenue diversification has emerged as an important trend in US local and state government finance. As a result, the role of the property tax has declined relative to other revenues, such as income taxes, sales taxes and user charges. This article examines the impact of revenue diversification on the revenue stability of local governments and whether the impact varies according to the nature of a jurisdiction's economic base. The findings are highly relevant to autonomous national governments in the EU. In addition, revenue stability is a significant factor that rating agencies take into account when determining a government's capacity to pay off debt, so the article has particular relevance to countries with large debts.     

The revolutions in China’s inter-governmental fiscal system

There were three periods in the development of China’s inter-governmental fiscal system. In the first period (1950s to 1979), local governments collected tax revenues and remitted upward to the central government. Reforms during the next two periods made revolutionary changes to the system. The tax-sharing system (established in 1994) provides for revenue centralization, spending decentralization, and large central transfers to local governments. This system remains largely in force.     

Population Ageing,Fiscal Pressure and Tax Smoothing: A CGE Application to Australia*

This paper analyses the fiscal pressure from population ageing using an intertemporal CGE model, applied to Australia, and compares the results with those of a recent government‐commissioned study. The latter study uses an alternative modelling approach based on extrapolation rather than optimising behaviour of consumers and firms. The deadweight losses from the fiscal pressure caused by population ageing are equivalent to an annual loss of consumption of $260 per person per year in 2003 dollars in the balanced‐budget scenario. A feasible degree of tax smoothing would reduce this welfare loss by an equivalent of $70 per person per year. Unlike the extrapolation‐based model, the CGE approach takes account of feedback effects of ageing‐induced tax increases on consumption and labour supply, which in turn impact on the ultimate magnitude of fiscal pressure and therefore tax increases. However, a counterfactual simulation suggests that the difference in terms of deadweight losses between the two modelling approaches is modest, at about $30 per person per year.     

Taxation without representation: local fiscal response to intergovernmental transfers in China

This paper studies the effects of intergovernmental transfers on local public spending in China, an authoritarian country where local politicians are not largely accountable to residents. The identification exploits a discontinuity from the central government’s designation of National Poor Counties. We find that additional transfers to county governments increase local public spending one-for-one. We further confirm that counties receiving additional transfers do not reduce the effective tax burden borne by firms. The results echo the empirical anomaly of the flypaper effect found in developed economies under democratic governments.     

Local fiscal distress and investment efficiency of local SOEs

In this paper, we use A-share listed firms between 2002 and 2010 to investigate the relationship between local fiscal distress and the investment efficiency of local SOEs, along with the effect of corporate tax payments on this relationship. We find a positive relationship between the extent of local SOEs' overinvestment and the fiscal distress of the corresponding local government where the enterprise and this relationship become stronger for firms that pay fewer taxes. The pattern of underinvestment among local SOEs was in contrast,and these relationships do not exist for non-SOEs or central SOEs. Moreover,we find that expanding a firm's investment scale leads to an increase in total taxes paid, including income and turnover taxes, which further result in more local fiscal revenue. Overall, we conclude that local governments have an incentive to increase fiscal revenue when faced with fiscal distress by raising the investment scale of local SOEs and that the incentives and effects of such interventions appear to be stronger among firms that contribute less to local fiscal revenue.ó 2013 Production and hosting by Elsevier B.V. on behalf of China Journal of Accounting Research. Founded by Sun Yat-sen University and City University of Hong Kong.     

The Distributional Implications of Income Under‐Reporting in Hungary*

The ability and inclination of specific social groups to evade tax vary widely, and this leads to considerable variation in the actual tax burden on individuals with similar levels of income. Thus, ignoring tax evasion can be seriously misleading in terms of the distributive and fiscal effects of the tax system. This paper estimates the distributional implications of income tax evasion in Hungary, based on a random sample of the administrative tax records of nearly 230,000 individuals. Gross incomes declared in the administrative tax returns are compared with incomes stated in a nationally representative household budget survey. Our estimates show that the average rate of underreporting is 9–13 per cent, though this conceals a big difference between the self‐employed (who hide the greater part of their income) and employees. The estimates are likely to be lower bounds. These rates are used in a tax– benefit microsimulation model to calculate the fiscal and distributional implications of under‐reporting. Tax evasion reduces households' personal income tax payments by about 16–20 per cent. While the poverty rate increases only slightly, income inequality rises significantly, suggesting that high‐income households tend to evade tax proportionately more. Finally, we find that tax evasion largely reduces the progressivity of the tax system.     

A comparison of nominal and indexed debt under fiscal constraints

This paper makes a welfare comparison between the issuance of price-indexed and nominal public debt in the presence of fiscal constraints, viz. a debt constraint, a deficit constraint and a combination of both. Distortionary taxes or public consumption are regulated to avoid the violation of the relevant fiscal constraint(s). Under a debt constraint indexed debt is generally preferred, while under a deficit constraint the results are more mixed. Introducing inflation persistence and raising the maturity of the debt tend to increase the magnitude of the welfare differences between the two types of debt. Welfare differences are further affected by the degree to which public consumption and tax revenues are indexed to actual versus structural nominal GDP.     

Tax Setting in a Federal System: The Case of Personal Income Taxation in Canada

In a decentralised tax system, the effects of tax policies enacted by one government are not confined to its own jurisdiction. First, if both the regional and the federal levels of government co-occupy the same fields of taxation, tax rate increases by one layer of government will reduce taxes collected by the other. Second, if the tax base is mobile, tax rate increases by one regional government will raise the amount of taxes collected by other regional governments. These sources of fiscal interdependence are called in the literature vertical and horizontal tax externalities, respectively. Third, as Smart (1998) shows, if equalisation transfers are present, an increase in the standard equalisation tax rate provides incentives to raise taxes to the receiving provinces. A way to check the empirical relevance of these hypotheses is to test for the existence of interactions between the regional tax rate, on the one hand, and the federal tax rate, the tax rate set by competing regions, and the standard equalisation tax rate, on the other hand. Following this approach, this paper estimates provincial tax setting functions with data on Canadian personal income taxation for the period 1982–1996. We find a significant positive response of provincial tax rates to changes in the federal income tax rate, the tax rates of competing provinces, and the standard equalisation rate (only for receiving provinces). We also find that the reaction to horizontal competition is stronger in the provinces that do not receive equalisation transfers.     

Fiscal equalisation schemes under competition

This paper considers optimal fiscal equalisation in a federation that competes with other federations for business tax base. It formalises the argument that, under certain circumstances, federations have an incentive to foster tax competition among their subunits in order to attract tax base from other federations. We show that optimal fiscal equalisation serves the purpose of redistributing income from rich to poor subunits and of choosing an optimal level of tax competition. The latter is chosen as a trade-off between three goals. First, decentralised tax rate setting has positive fiscal externalities within the federation and, thus, tax rates are inefficiently low. Second, in the presence of hold-up problems in investment, tax rates may be inefficiently high. Then, tax competition serves as a commitment device for low future tax rates and is, thus, welfare enhancing. Third, generous fiscal equalisation within the federation is a commitment to not aggressively compete with subunits outside the federation for tax base; as a consequence, with optimal equalisation, equilibrium tax rates are higher within and outside the federation—and even higher than in the case of centralised (i.e. federal level) tax rate setting.     

地方政府财政压力与银行信贷资源配置效率——基于我国城市商业银行的研究证据

基于2005—2015年我国城市商业银行的样本,本文研究省级地方政府财政压力是否对商业银行信贷资金投向和信贷资源配置效率产生影响。研究发现,地方政府财政压力是影响城市商业银行信贷资源配置的重要因素。具体而言,省级地方政府的财政压力越大,省内城市商业银行投向地方国有经济部门的贷款比率越高。然而,信贷资源更多投向地方国有经济部门的银行有更高的不良贷款率和更差的会计业绩。进一步研究发现,在财政压力大的省份,城市商业银行投向地方国有经济部门的贷款比率越高,则贷款拨备率越低,这表明城市商业银行会通过盈余管理行为来应对监管压力。本文研究结论对商业银行监管以及防范化解金融风险有重要启示。     

Does Germany Collect Revenue from Taxing the Normal Return to Capital?*

A widespread objection to the introduction of consumption tax systems claims that this would lead to high tax revenue losses. This paper investigates the revenue effects of a consumption tax reform in Germany. Our results suggest that the revenue losses would be surprisingly low. We find a maximum revenue loss of 1.6 per cent of annual GDP. In some years, we even find tax revenue gains. This implies that the current tax system collects little revenue from taxing the normal return to capital. Based on these results, we calculate a macroeconomic measure of the effective tax rate on capital income.