Firm-level determinants of tax evasion in transition economies

Business tax evasion is an important issue for governments. Yet the factors that determine business tax evasion have not been sufficiently examined in the literature in general, and in transition contexts in particular. To address this gap, this study uses the WB/EBRD Business Environment and Enterprise Performance Survey (BEEPS) database with a sample of over 12,692 firms from 26 transition economies. Applying various modelling strategies, we argue that tax evasion is a function of firm-level and institutional-level variables. We contribute to the literature by providing robust evidence showing that the perceived tax burden has a positive impact on tax evasion. We also find that the tax evasive behaviour of firms is positively influenced by low trust in government and in the judicial system as well as by higher perceptions of corruption and higher compliance costs. We find that smaller firms, individual businesses and firms in sectors that are less visible to the tax administration are more likely to get involved in evasive behaviour. Overall, institutional factors play an important role in determining firms’ tax evasion behaviour in transition economies. This finding has important policy implications.     

Viewpoint: Can U.S. local soda taxes continue to spread?

Taxes to reduce the consumption of sugar-sweetened beverages (SSBs) such as soda drinks have been endorsed by the World Health Organization and are now in place in France, Hungary, and Mexico, and scheduled for Portugal, South Africa, and Great Britain. Such taxes have so far been impossible to enact in the United States at the state or federal level, but since 2014 seven local jurisdictions have put them in place. Three necessary conditions for local political enactment emerge from this recent experience: Democratic Party dominance, external financial support for pro-tax advocates, and a political message appropriate to the process (public health for ballot issues; budget revenue for city council votes). Roughly 40 percent of Americans live within local jurisdictions where the Democratic Party dominates, so room exists for local SSB taxes to continue spreading.     

Payments for agrobiodiversity conservation services: An overview of Latin American experiences,lessons learned and upscaling challenges

Many developing countries face a major challenge today: how to safeguard the biodiversity maintained in the fields of the rural poor - which constitute a national and global public good - whilst meeting those same people's development needs and rights? A solution to this dilemma has thus been sought in adapting the design and implementation of Payments for Ecosystem Services (PES) concepts to the conservation of agrobiodiversity.Here we review the application of nine such Payments for Agrobiodiversity Conservation (PACS) schemes that have been applied to date in four Latin American countries over the period 2010–2018. These covered 130 threatened varieties across a number of major food crops, and involved over 100 farming communities and 1,100 farmers (45 % of which were women). Conservation service offers were received through a competitive tender mechanism. Average bid offers revealed high heterogeneity, varying between US$675/ha. to ten times as much.In relation to issues identified as key to PES, such as spatial targeting, differentiated payments and conditionality, the underlying design of the PACS schemes may be considered solid. PACS-related prioritisation processes allow for the a priori identification of sites with high ecosystem service densities and high threat levels. The use of competitive tenders permits accounting for cost heterogeneity in the provision of conservation services and for payments to be differentiated. Conditionality is strong.In terms of implementation, a “back of the envelope” calculation based on the results of the competitive tenders suggests that conservation costs are modest. For a priority conservation portfolio of 100 varieties (which may be from different crops) each with a target area of five hectares, costs would amount to just under US$860,000 over twenty years or US$70,000 p.a. at a 5 % discount rate. The small-scale and one-off nature of the interventions realised to date, along with threatened crop variety seed availability constraints, have however meant that environmental effectiveness has been incomplete in the short-term (area cultivated with specific threatened varieties increased, but still below the “not at risk” threshold). The establishment of systematic monitoring systems is required to determine longer-term impacts and inform more regular PACS interventions within a dynamically evolving systems context.     

Macroeconomic implications of modeling the Internal Revenue Code in a heterogeneous-agent framework

Tax policy analysis in heterogeneous-agent models typically involves the use of smooth tax functions to approximate complex present tax law and proposed reforms. In this paper, we explore the extent to which the tax detail omitted under this conventional approach has macroeconomic implications relevant for policy analysis. To do this, we develop an alternative approach by embedding an internal tax calculator into a large-scale overlapping generations model that, while conditioning on idiosyncratic household characteristics, explicitly models key provisions in the Internal Revenue Code applied to labor income. We find that for a debt-constant steady state analysis of a given tax policy change, both approaches generate similar policy-induced patterns of macroeconomic activity despite variation in the underlying patterns of household tax-preferred consumption and labor supply behavior. However, this variation in underlying behavior is associated with significant quantitative and qualitative differences in macroeconomic aggregates along a debt-financed transition path immediately following a policy change. Consequentially, although the use of unconditional smooth tax functions may be a reasonable modeling simplification for steady state analysis of tax policy, caution should be taken for their use in transition path analysis within heterogeneous-agent models.     

Political competition,tax salience and accountability. Theory and evidence from Italy

This paper argues that electoral competition may hinder rather than foster political accountability, especially when elected officers can choose among a number of tax instruments. We develop a political agency model showing that politicians in more competitive jurisdictions use less salient tax instruments more intensely. Defining salience as visibility or, analogously, as voters' awareness of the costs associated with specific government revenue sources, we argue that voters are less likely to hold politicians to account for the associated tax burden of a less salient instrument. This in turn implies that strategic politicians will more heavily rely on less salient revenue sources when electoral competition is stronger. Using data on Italian municipal elections and taxes over a 10-year period, we determine the degree of salience of various tax instruments, including property taxes (high salience) and government fees for official documents (low salience). We then show that mayors facing stronger competition for re-election use less salient tax instruments more intensely.     

税收优惠影响企业创新产出的多元机制研究——来自中国软件与集成电路产业的证据

创新政策一直是激励企业创新的重要手段，其中税收优惠政策是一种具有市场导向性的激励政策，对企业创新具有良好的促进作用，但是政策对企业产生激励作用的原因尚不清晰。选取对我国技术突破有重要作用的软件与集成电路企业，采用2006-2018年中国A股上市公司数据，聚焦2011年国家对软件与集成电路行业的两个税收优惠政策，运用双重差分法对企业创新产出影响进行实证研究。结果发现：税收优惠政策对发明专利申请有显著促进作用，而对非发明专利申请无显著影响。融资约束、企业避税行为等是税收激励政策发挥作用的主要渠道。另外，税收优惠政策对不同规模、产权和区域企业有不同影响，税收优惠政策对大型企业、国有企业以及中西部地区企业创新产出促进作用更大。从税收优惠政策长期影响看，该政策对专利申请的影响存在时滞性，而发明专利申请在政策发生当年就显著增加。研究结论可为明晰税收优惠政策、融资约束与企业创新产出间关系提供有益启示。     

One size may not fit all: Welfare benefits and cost reductions with optional differentiated household electricity rates

We consider optional time-of-use (TOU) pricing for residential consumers, offered by a publicly regulated electricity supplier, as an alternative to a single TOU or flat rate structure. An equilibrium model explores and quantifies the effects of such pricing on welfare, consumption, and production costs. The supplier offers to each household a menu of possible rate structures obtained by maximizing a collective welfare function subject to three restrictions: Pareto efficiency, incentive compatibility, sufficiency of supplier revenue to cover costs. Simulations based on realistic calibration of the model demonstrate that optional pricing can increase overall consumer welfare and reduce average cost.     

Effects of investor tax heterogeneity on stock prices and trading behaviour around the ex-dividend day: the case of Australia

Using a sample of Australian stocks during the 1996–2014 period, this study examines how tax heterogeneity between domestic and foreign investors affects trading behaviour and stock prices around the ex-dividend day. Domestic investors prefer dividends and tend to buy stocks cum-dividend and sell them ex-dividend whereas foreign investors tend to trade in the opposite direction. Abnormal trading turnover increases with tax heterogeneity. Moreover, stocks with a larger domestic investor base are associated with a higher price drop-off ratio on the ex-dividend day and higher market value of franking credits. Overall, our findings support the dynamic dividend clientele hypothesis.     

Price competition between green and non green products under corporate social responsible firm

This article deals with a newsvendor inventory model in light of green product marketing of corporate social responsible firms. In this model, comparison between green and non green marketing is analyzed including subsidy and tax implementation by Government where the Government offers higher subsidy and lower tax to the green producer unlike the lower subsidy and higher tax to the non green producer. There is also price contest between green and non green producer as the demands of the products are dependent on sales price, carbon emission and corporate social responsibility index. Assuming the cost and profit parameters, an expected profit function of the systems is formulated and maximized analytically. Finally, numerical examples are illustrated to justify the proposed model.