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Journal articles on the topic 'Income tax Taxation Developing countries'
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Matsumoto, Tomoko. "Thai tax reforms from 1992 to 2013: the problems of tax systems in developing countries." Japanese Journal of Political Science 19, no. 3 (August 29, 2018): 417–28. http://dx.doi.org/10.1017/s1468109918000221.
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AbstractTaxation is considered an important reason for the persistent inequality in developing countries. Developing countries tend to rely heavily on revenue from regressive taxation on consumption, such as the value-added tax, and fail to use progressive income taxes for revenue. Thailand is a typical case of those developing countries. Scholars argue that the median voter model does not apply to the developing countries because their ineffective income taxation results from the weak representation of the poor. A close examination of tax politics in Thailand, however, demonstrates that the low revenue from income taxation in Thailand is attributed to the strong representation of the poor rather than the weak one. This study details the process of Thai tax reform based on interviews with policymakers in Bangkok. It traces changes in the country's tax regulations and uses tax data collected at both the local and national level. Tax reforms, particularly those on income taxes after the 1997 financial crisis, have resulted in a decreased tax burden on the poor as well as the rich.
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Abuselidze, George. "Optimality of Tax Policy on the Basis of Comparative Analysis of Income Taxation." European Journal of Sustainable Development 9, no. 1 (February 1, 2020): 272. http://dx.doi.org/10.14207/ejsd.2020.v9n1p272.
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This paper is to determine the optimality of taxation based on a comparative analysis of income taxation in developed and developing countries. In our opinion, the main idea of income tax should be the optimal distribution of tax literacy on the basis of a direct definition of income of taxpayers or progressive taxation.
The theoretical and methodological basis of the research is the main provisions of the market economy, classical and modern tax theories, legislative and regulatory acts of foreign countries. The main part of the empirical material is from 2002 to 2017. In the process of analysis of the actual material, together with the general scientific method of research, is used: Comparative and systemic analysis, analogy, statistical data monitoring and other methods. The comparative and systemic analysis will give us an opportunity to reveal and evaluate the ways of perfection. Analogy and comparative analysis is based on variables and features, such as the of income taxes structure, withdrawal rules, rates, tax base. Statistic concept tries to explain the named phenomena by the way of fundamental analyzing of the statistic data received resulted multiple statistic observation. Previous analyses of tax rates tend to support the hypothesis that Developed countries emphasize the importance of fairness, while developing countries are mainly focused on mobilizing budget revenues and lesser consideration of fair taxation principles, since the tax system performs a fiscal function more effectively than developing countries.
Keywords: Tax policy, income tax, tax burden, budget, well-being
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Hernández, Gonzalo, and María Alejandra Prieto. "Terms of trade shocks and taxation in developing countries." Cuadernos de Economía 39, no. 81 (July 1, 2020): 613–34. http://dx.doi.org/10.15446/cuad.econ.v39n81.80207.
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We find evidence suggesting that economies with a tax structure more oriented toward indirect taxes –rather than direct taxes– tend to mitigate the effect of terms of trade shocks on output fluctuations. This finding might be particularly important for lower-income countries since the negative welfare effects caused by macroeconomic volatility in the absence of consumption-smoothing mechanisms are more severe in developing economies exposed to external shocks. Additionally, some of these economies are attempting to reorient their tax structure toward more direct taxes following the standards in advanced economies.
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Besley, Timothy, and Torsten Persson. "Why Do Developing Countries Tax So Little?" Journal of Economic Perspectives 28, no. 4 (November 1, 2014): 99–120. http://dx.doi.org/10.1257/jep.28.4.99.
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Low-income countries typically collect taxes of between 10 to 20 percent of GDP while the average for high-income countries is more like 40 percent. In order to understand taxation, economic development, and the relationships between them, we need to think about the forces that drive the development process. Poor countries are poor for certain reasons, and these reasons can also help to explain their weakness in raising tax revenue. We begin by laying out some basic relationships regarding how tax revenue as a share of GDP varies with per capita income and with the breadth of a country's tax base. We sketch a baseline model of what determines a country's tax revenue as a share of GDP. We then turn to our primary focus: why do developing countries tax so little? We begin with factors related to the economic structure of these economies. But we argue that there is also an important role for political factors, such as weak institutions, fragmented polities, and a lack of transparency due to weak news media. Moreover, sociological and cultural factors—such as a weak sense of national identity and a poor norm for compliance—may stifle the collection of tax revenue. In each case, we suggest the need for a dynamic approach that encompasses the two-way interactions between these political, social, and cultural factors and the economy.
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Berens, Sarah, and Armin von Schiller. "Taxing Higher Incomes: What Makes the High-Income Earners Consent to More Progressive Taxation in Latin America?" Political Behavior 39, no. 3 (November 22, 2016): 703–29. http://dx.doi.org/10.1007/s11109-016-9376-2.
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Abstract When do high-income earners get ‘on board’ with the fiscal contract and accept paying a larger share of the tax burden? Progressive taxes perform particularly poorly in developing countries. We argue that the common opposition of the affluent to more progressive taxation is not merely connected to administrative limitations to coercively enforce compliance, but also to the uncertainty that high-income earners associate with the returns to taxes. Because coercion is not an option, there is a need to convince high-income earners to ‘invest’ in the public system via taxes. Trust in institutions is decisive for the fiscal contract. Expecting that paid contributions will be used in a sensible manner, high-income earners will be more supportive of progressive income taxation. We study tax composition preferences of a cross-section of Latin American countries using public opinion data from LAPOP for 2012. Findings reveal that higher levels of trust in political institutions strongly mitigate the opposition of the affluent towards more progressive taxation.
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Bird, Richard M., and Eric M. Zolt. "Dual Income Taxation: A Promising Path to Tax Reform for Developing Countries." World Development 39, no. 10 (October 2011): 1691–703. http://dx.doi.org/10.1016/j.worlddev.2011.04.008.
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Bardhi, Ejona. "Albanian Economy: Proportional or Progressive Taxation?" Mediterranean Journal of Social Sciences 8, no. 1 (January 26, 2017): 176–79. http://dx.doi.org/10.5901/mjss.2017.v8n1p176.
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Abstract Choosing the best system of taxation lies in the balance between equality and fairness or efficiency. It is an expression that should guide any fiscal policy. Given that one of the hottest economic topics that pits the political parties can not stay away from the attention of citizens and scholars of the economy. On the one hand we have a tax that provides the same percentage for all categories of income, on the other hand you have a tax increase progressively in line with revenues. therefore, taxes less progressive taxation individuals with lower incomes, but if the tax burden shifted progressively to individuals with higher incomes, it remains to be discussed. Like most developing countries, Albania differs in many respects from developed countries, among which capacity institutional, state, rule of law, the structure of the economy and other economic characteristics. Such differences justify a different tax policy. Progressive taxation has been applied in Albania since 2015. Is this a tax that provides equality for all? Stated every moment and in every public appearance of our politicians, "equality before the law" as a principle that should be applied objectively and accurately reports, but this system offers true equality before the law? What has brought the Albanian economy this system? What happened to investments or unemployment? Through this work I intend to present a clear analysis of income tax applied in Albanian economic system and how this tax has affected the economy as a whole. Also this work is also a reflection on the advantages and disadvantages of this tax system.
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Steenkamp, Lee-Ann. "The Permanent Establishment Concept In Double Tax Agreements Between Developed And Developing Countries: Canada/South Africa As A Case In Point." International Business & Economics Research Journal (IBER) 13, no. 3 (April 28, 2014): 539. http://dx.doi.org/10.19030/iber.v13i3.8591.
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In this era of globalisation, developing countries have resorted to double tax agreements in order to attract foreign direct investment. The extent to which a countrys tax treaty policy favours developing countries or not depends upon the extent to which the country is prepared to adopt provisions from the UN model tax convention as opposed to the OECD model. Developing countries in particular should carefully consider the design of their tax treaties so as to effectively combat tax avoidance, without sacrificing foreign direct investment. To this end, the Canada/South Africa tax treaty is compared and contrasted with these two models. The concept of permanent establishment is reviewed in this context. It was found that the Canada/South Africa tax treaty is overwhelmingly based on the OECD model. This could indicate that South Africa has a deliberate tax treaty policy of ceding taxing rights to other countries. Thus, developing countries are seemingly unable or unwilling to make use of the UN model so as to retain greater source taxation. A number of recommendations are made to broaden the scope for the source taxation of business income in the developing country.
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Vylkova, Elena, and Anna Shmatko. "Налогоплательщики налога на доходы физических лиц как значимые участники инициативного бюджетирования." Belarusian Economic Journal 2/2020, no. 2 (91) - 2020 (June 26, 2020): 143–52. http://dx.doi.org/10.46782/1818-4510-2020-2-143-152.
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The article analyzes the state of proactive budgeting in the world and in Russia as well as identifies the main possible directions for its development. The directions of reforming the taxation of personal income in foreign countries and Russia over the recent years are considered. Demand for a fair and effective approach to taxation is shown. The feasibility of developing proactive budgeting in the context of the personal income tax (PIT) reform in terms of expanding the rights of honored and distinguished taxpayers of PIT for participation in participatory budgeting is substantiated. Suggestions have been formulated to amend the regulatory framework on proactive budgeting, to encourage honored and distinguished taxpayers, and to provide them with the opportunity to actively participate in creating a list of projects as well as making decisions on their financing.
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Kangave, Jalia. "The Dominant Voices in Double Taxation Agreements: A Critical Analysis of the “Dividend” Article in the Agreement between Uganda and the Netherlands." International Community Law Review 11, no. 4 (2009): 387–407. http://dx.doi.org/10.1163/187197409x12525781476123.
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AbstractIn a bid to attract foreign investment, Third World countries are increasingly concluding Double Taxation Treaties with capital-rich countries, based on either the UN model treaty convention or the OECD model. Using the example of the dividend Article in the Uganda-Netherlands treaty, the discussion in this article illustrates the increased use of tax treaties to shift income from developing to developed countries. By essentially reducing the tax rate on dividend income to nil, that treaty significantly erodes Uganda's tax base. Such agreements raise concern, especially when one takes into account the fact that investment decisions are often driven by factors external to tax, meaning that reduced tax rates do not guarantee increased investments. Worse still, because developing countries are net capital importers, the benefits accruing from such treaties are often one-sided. The paper calls for a rethinking and redrafting of the UN model convention to ensure that the taxing rights of Third World countries are strengthened. In addition, since the practical reality is that developed countries often base their agreements (even with developing countries) on the OECD model, there is a need to amend the latter model to take this reality into account.
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Karakotsios, Achillefs, Constantinos Katrakilidis, Dimitrios Dimitriadis, and Theodoros Christoforidis. "Examining the relationship between income inequality, taxation and economic freedom: a panel cointegration approach." Economics and Business Letters 9, no. 3 (December 8, 2020): 206–15. http://dx.doi.org/10.17811/ebl.9.3.2020.206-215.
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Income inequality has become an important challenge for both developed and developing countries. Taxation and economic freedom are considered as important factors affecting income inequality. This paper aims at the empirical investigation of the causal relationships between income inequality, taxation and economic freedom by applying panel cointegration techniques and Pooled Mean Group (PMG) estimation method on a panel of 58 countries, over the period 1995–2016. The empirical evidence supports a bidirectional long-run causal effect between taxes-to-GDP ratio and income inequality with tax-to-GDP ratio to cause negative impacts on income inequality and thus revealing the redistributive role of taxes. Furthermore, we find a positive effect from economic freedom on income inequality, suggesting a trade-off between economic freedom and income equality.
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Khan, Ahmad. "Presumptive Tax as an Alternate Income Tax Base: A Case Study of Pakistan." Pakistan Development Review 32, no. 4II (December 1, 1993): 991–1004. http://dx.doi.org/10.30541/v32i4iipp.991-1004.
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There is a general consensus that an efficient means of mobilising revenues is necessaIy for improved public infrastructure and for preventing disruptions in the economy [Wilfried (1991)]. Inappropriate and unsustainable expenditure and revenue policies, on the contrary, cause disappointing economic performance. Hence, the concern with mobilising adequate resources through improved taxation and better pricing of public services. A review of the existing taxation systems of several developing countries suggests that these are distortionary in nature and contribute to a number of economic problems including production inefficiency, capital flight and fiscal and balance of payments disequilibria [Asher (1990)]. They are generally complex (difficult to administer and comply with), inelastic (nonresponsive to growth and discretionary policy measures), inefficient (raise little revenues but introduce serious economic distortions), inequitable (treat businesses and individuals in similar circumstances differently) and, quite simply, unfair (tax administration and enforcement are selective and skewed in favour of those capable of defeating th~ system) [McLure and Zodarow (1991)]. Further, there is heavy reliance on taxes on international trade (approx. 80 percent for India and Thailand, 84 percent for Sri Lanka, 70 percent for the Philippines, 50 percent for Turkey). User charges and taxes on income, property and capital contribute only a small proportion of the overall revenues (pakistan 20 percent, Thailand 19 percent, India 17 percent, the Philippines 19 percent). Agricultural incomes are not taxed. personal and corporate income taxes are levied on narrow bases at high rates. These tax structures impose varying levels of taxation, depending on the form of income, type of assets, size and legal status of businesses, and the kind of Qusiness activity (i.e. are 'schedular' in nature). As a result, the average effective tax rate and the marginal effective tax rate substantially vary across assets and section-thereby distorting individual choices with respect to the form of income, the sector of investment activity, and the time profile of investment [Bulutoglu and Thirsk (1991)].
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Steenkamp, Lee-Ann. "Beneficial Ownership Provisions In Tax Treaties Between Developed And Developing Countries: The Canada/South Africa Example." International Business & Economics Research Journal (IBER) 12, no. 9 (August 30, 2013): 1107. http://dx.doi.org/10.19030/iber.v12i9.8056.
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In the years since the Organisation for Economic Cooperation and Development (OECD) adopted its first draft tax treaty in 1963, the world has experienced an astonishing surge in international trade and investment. The tax treatment of these cross-border transactions is affected by double tax agreements. As tax treaty networks will likely continue to expand, concerns about tax treaty abuse might be expected to grow. The extent to which a countrys tax treaty policy favours developing countries - or not - depends upon the extent to which the country is prepared to adopt provisions from the UN model tax convention as opposed to the OECD model. Developing countries, in particular, should carefully consider the design of their tax treaties so as to effectively combat tax avoidance without sacrificing foreign direct investment. To this end, the Canada/South Africa tax treaty is compared and contrasted with these two models. The concept of beneficial ownership is reviewed in this context. It is contended that a general definition in South Africa's Income Tax Act of 'beneficial ownership' would assist in the interpretation of the term for the purposes of South Africa's tax treaties. It is submitted that the scope for the source taxation of passive investment income (viz. dividends, interest and royalties) in the developing country could be magnified through treaty negotiations.
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Umar, Mohammed Abdullahi, Chek Derashid, and Idawati Ibrahim. "What Is Wrong With the Fiscal Social Contract of Taxation in Developing Countries? A Dialogue With Self-Employed Business Owners in Nigeria." SAGE Open 7, no. 4 (October 2017): 215824401774511. http://dx.doi.org/10.1177/2158244017745114.
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Contemporary societies are bound in a fiscal social contract between citizens and their elected governments who administer the states in the interest of all members. The fiscal social contract implies that citizens should pay tax which is utilized by government to execute programs for the collective good. While the advanced countries have done a better job of mobilizing tax as a resource for societal development, developing countries have performed poorly. A large number of high-income earners in developing countries avoid the tax system thus hampering development efforts. Previous studies have alluded to a culture of tax evasion among citizens of developing countries as a key factor influencing noncompliance. However, this study argues that these studies did not reach the best conclusion as their methodology excluded the taxpayers’ narratives. We interviewed self-employed taxpayers in Nigeria’s capital city, Abuja. Results of the analysis revealed taxpayers’ frustration with an opaque tax system, deplorable socioeconomic condition, and nonfunctioning of the tax audit system. We argue that the massive tax noncompliance in developing countries may be better understood as “tax boycott” arising from taxpayers’ frustration with the fiscal social contract of governance. Policy implications of the findings were discussed in the concluding section.
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Barashyan, Liana. "Features of taxation in agriculture in the Russian Federation and abroad: comparative analysis." E3S Web of Conferences 273 (2021): 08004. http://dx.doi.org/10.1051/e3sconf/202127308004.
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The article was completed on the topic “Features of taxation in agriculture in the Russian Federation and abroad: comparative analysis.” In the article, the author discloses the features of taxation in agriculture in Russia and in a number of European states. Conducts an analysis of the effectiveness of the current system and offers directions for its improvement. The experience of agricultural taxation in developing countries is examined, conceptual and practical problems related to different tax regimes are analyzed. The main problem in the study countries is the measurement of (actual) agricultural income. Various measures of estimated income were used with varying success. In this article, the issues of legal regulation of agricultural taxation in Russia and abroad, the right to use nature in agricultural activities were investigated, the problems of regulatory support for rational environmental use in agriculture were identified, and the directions for optimizing the legislative regulation of the use of natural resources for agricultural activities were determined.
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Alekseev, A. S. "Opportunities for tax planning for digital companies: international experience." Russian Journal of Industrial Economics 14, no. 2 (June 30, 2021): 214–22. http://dx.doi.org/10.17073/2072-1633-2021-2-214-222.
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The article deals with comparing taxation conditions of a range of countries which can be applied for IT companies as the subjects of digital economy. The author examines the peculiar features of tax privileges, tax planning tools and optimization for running digital companies in such countries as Estonia, Hong Kong, Great Britain, Malta and Ireland. These countries are included in a number of international ratings and are highly estimated by foreign experts as regards the level of convenience of doing IT business. The author especially focuses on the financial calculations of possible ways for tax optimization and the key features of implementation of the extremely popular in European countries IP-Box regimes. In conclusion the author concentrates on the patterns and trends within the tax jurisdictions under consideration including the one regarding the existing treaties on avoiding double taxation. He points out that it is possible to use the international experience in order to create competitive taxation of digital companies in Russia as part of developing addenda to the package of measures (effective 01.01.2021) which is also called “tax maneuver”. In particular, it is suggested that income tax rate for IT businesses in Russia should be altered taking into consideration the foreign countries’ indexes. Moreover, the author presents his ideas on the components of possible use of such measures as “digital residency” as part of the second package of “tax maneuver” measures. The author makes a conclusion on the importance of implementing non-taxation measures for maintaining rapid development of IT-industry in Russia and enumerates the most essential directions and problems of the IT-society and the possible ways of their realization.
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Balliu, Henris. "Comparative Review of Tax Systems in the Republic of Albania and Great Britain." European Journal of Economics and Business Studies 4, no. 2 (August 1, 2018): 166–70. http://dx.doi.org/10.2478/ejes-2018-0049.
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Abstract The taxation system is most certainly one of the main pillars of economic development towards sustainable growth.The aim of this paper is to critically assess the importance of an effective Tax System, its impact on the Albanian economy. Furthermore we shall outline a comparison of the Albanian Tax system to that of the United Kingdom. At this time a number of very important reforms are being undertaken by the government of Albania in light of future integration towards the European Union.The overview on the United Kingdom has the aim to enlighten the path on what should be our focus while building a Tax System that can help economic growth, to that effect Great Britain as a country of a stable and strong economy can be of example.Many differences can be noticed between the United Kingdom tax system and the Albanian one. This fact is simple to be accepted as Britain is one of the world superpowers, while the Albanian economy is a developing one. The tax systems in these two countries, the development history, application of VAT or Income Tax have had very different processions.The United Kingdom has one of the most voluminous Tax Acts in the world. The international company of legal research “LexisNexis” discovered that the Acts of Parliament on Taxation in the United Kingdom have more than doubled since 1997. The annual amendments to taxation are part of the Finance Act which has the power to change norms and principles of taxation as previously defined. Taxation in the United Kingdom usually includes payments for central government agencies called Her Majesty’s Revenues and Incomes and local councils. Local Councils collect a tax called business norms from businesses. The Albanian Taxation System consists of a packet of laws, regulations, guidance and tax agreements, on the procedure of application, measure, amendment and removal of taxes.Taxes are the main source of income in the state budget and the local government budget and the foundation of the whole Albanian tax system. In conclusion, we shall analyze the impact of the frequent changes to Taxation Law within the Albanian system and the challenges faced in light of this changes in terms of implementation and application.
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Abuselidze, George. "FISCAL POLICY DIRECTIONS OF SMALL ENTERPRISES AND ANTI-CRISIS MEASURES ON MODERN STAGE: DURING THE TRANSFORMATION OF GEORGIA TO THE EU." Science and Studies of Accounting and Finance Problems and Perspectives 12, no. 1 (December 19, 2018): 1–11. http://dx.doi.org/10.15544/ssaf.2018.01.
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The paper is aimed to determine the optimality of taxation, that can be used to plan and implement effective anti-crisis measures. Objective is not to define or diagnose crisis and suggest strategies, but to offer methodologies, that can be used to determine the influence of formal and informal institutions of company’s ongoing activities. To develop recommendations for avoiding business crisis situation and support its development. The theoretical and methodological basis of the research is the main provisions of the market economy, legislative and regulatory acts of Georgia and foreign countries, statistical data of Georgia, the global risks report, government bodies and business structures in this field. In the process of analysis of the actual material, together with the general scientific method of research, is used: systemic analysis, comparative analysis of scientific literature, statistical analysis, analogy and other methods. As a result of researches it is established that developed countries emphasize the importance of fairness, while developing countries are mainly focused on mobilizing budget revenues and lesser consideration of fair taxation principles, since the tax system performs a fiscal function more effectively than developing countries. In our opinion, the main idea of tax policy should be the optimal distribution of tax literacy on the basis of a direct definition of income of taxpayers or progressive taxation. Practical implementation of the proposed proposals will facilitate further improvement of the social climate in the country, revitalize small and medium businesses, and solve the problem of employment in the country.
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Franchina, Carlo, Rod Henderson, and Praneel Nand. "Getting the message across—taxation contribution of the petroleum industry in Australia." APPEA Journal 55, no. 2 (2015): 432. http://dx.doi.org/10.1071/aj14067.
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With the global move towards tax transparency reporting measures, resource companies face challenges in ensuring that reporting captures the full extent of revenues contributed by resource companies and also correctly reports the project and profitability life cycles of resource companies. This extended abstract focuses on the global tax transparency debate and highlights the challenges for large Australian and global oil and gas businesses in demonstrating their payment of their fair share of tax and contributing to the communities in which they operate. Issues to be covered include: A summary of the revenue contribution of oil and gas companies in Australia through the layers of taxation, such as state royalties, the Petroleum Resource Rent Tax (PRRT) and corporate income taxes. Highlighting the types and rates of taxes paid by Australian oil and gas companies compared to other selected countries. A comparison of the concessions granted to Australian oil and gas companies to other countries. A historical summary of taxes paid by Australian oil and gas companies. A summary of existing and developing transparency reporting, such as the Australian Taxation Office (ATO) reporting of taxpayers with revenues more than A$100 million, the Extractive Industries Transparency Initiative, Dodd Frank rules, OECD country-by-country reporting, and BEPS developments. Recommendations to get the message across; that is, what should be the common ground on reporting the actual overall global tax liability including income tax, resource taxes, employment taxes and indirect taxes.
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Lavić, Vernesa, and Azra Hadžiahmetović. "Corporate income tax burden for SMEs: The case of Bosnia and Herzegovina." BH Ekonomski forum 13, no. 2 (2021): 151–65. http://dx.doi.org/10.5937/bhekofor2102151l.
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Small and medium enterprises (SMEs) play a significant role in the economic development of both advanced and developing countries. Some earlier research showed that taxation and compliance costs have a significant effect on economic growth, development and performance of the business sector. For this reason, our research focuses on tax compliance costs imposed on the SMEs in Bosnia and Herzegovina (B&H), which is a transition and post-conflict country with a complex tax system structure. This complexity is particularly highlighted in the direct taxation system, hence the focus of this research is on corporate income tax (CIT) compliance costs. Our methodology is based on simulation of tax compliance costs between different entities in B&H - Federation of B&H (FB&H) and the Republika Srpska (RS), as well as measuring the effective tax burden for SMEs in B&H and the region. Our simulation of the CIT return of a company "X "in line with the entity law suggests that the effective tax burden is higher in RS than in FB&H entity. This is further confirmed with the effective tax rate formula applied in the second part of the research using data from the AMADEUS database. This result has an important policy implication for the fiscal authorities in B&H, as very often public discourse goes in the opposite direction to our finding.
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Boichev, Georgi. "Does global titling sustain informal taxation? Evidence from Ecuadorian urban slums." Environment and Development Economics 23, no. 6 (August 31, 2018): 721–36. http://dx.doi.org/10.1017/s1355770x18000293.
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AbstractLow-income urban neighborhoods in developing countries receive low levels of public services, often not supplemented by community provision due to low rates of informal tax compliance. This paper presents evidence from low-income neighborhoods in Quito, Ecuador using an IV empirical strategy that the global titling of neighborhoods sustains informal taxation. The estimates reveal a sizable average effect of global titling on in-kind labor household that is drawn from a broad base. Evidence is also found which suggests that the possession of a global title provides a neighborhood organisation with tools that deter free-riding behavior even among the individually-titled residents.
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Hanna, Rema, and Benjamin A. Olken. "Universal Basic Incomes versus Targeted Transfers: Anti-Poverty Programs in Developing Countries." Journal of Economic Perspectives 32, no. 4 (November 1, 2018): 201–26. http://dx.doi.org/10.1257/jep.32.4.201.
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Of the 17 Sustainable Development Goals articulated by the United Nations, number one is the elimination of extreme poverty by 2030. While future economic growth should continue to reduce poverty, it will not solve the problem by itself; thus, there is a potentially important role for national-level transfer programs that assist poor families in developing countries. Such programs are often run by developing country governments. Many countries have implemented transfer programs that seek to target beneficiaries: that is, to identify who is poor and then to restrict transfers to those individuals. Some people have begun to advocate for “universal basic income” programs, which dispense with trying to identify the poor and instead provide transfers to everyone. We begin by considering the universal basic income as part of the solution to an optimal income-taxation problem, focusing on the case of developing countries, where there is limited income data and inclusion in the formal tax system is low. We examine how the targeting of transfer programs is conducted in these settings, and provide empirical evidence on the tradeoffs involved between universal basic income and targeted transfer schemes using data from Indonesia and Peru—two countries that run nationwide transfer programs that are targeted to the poor. We conclude by linking our findings back to the broader policy debate on what tools should be preferred for redistribution, as well as the practical challenges of administering them in developing countries.
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Maganya, Mnaku Honest. "Tax revenue and economic growth in developing country: an autoregressive distribution lags approach." Central European Economic Journal 7, no. 54 (November 20, 2020): 205–17. http://dx.doi.org/10.2478/ceej-2020-0018.
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AbstractTanzania, like most other developing countries, faces numerous economic challenges in striving to achieve sustainable economic growth and development through taxation. In the literature, the debate on how effective taxes are as a tool for promoting economic growth and economic development remains inconclusive, as various research have reported mixed effects of tax on economic growth. This article investigates the effect of taxation on economic growth in Tanzania using the recently developed technique of autoregressive distributed lag model (ARDL) bounds testing procedure for the period from 1996 to 2019. Various preliminary tests were conducted including stationary tests as well as the pair-wise Granger causality test. According to the results obtained, domestic goods and services (TGS) taxes are positively related to GDP growth and are statistically significant at 1% level. Income taxes, on the other hand, were found to be negatively related to GDP growth and to be statistically significant at 5% level. The pair-wise Granger causality results indicated that there is bidirectional Granger causality between TGS and GDP growth at 1 % significance level. The government should aim at growing, nurturing and sustaining tax base to positively drive economic growth even further.
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Sabir, Samina, and Meshal Qamar. "Fiscal policy, institutions and inclusive growth: evidence from the developing Asian countries." International Journal of Social Economics 46, no. 6 (June 10, 2019): 822–37. http://dx.doi.org/10.1108/ijse-08-2018-0419.
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Purpose The purpose of this paper is to examine the impact of fiscal policy and institutional quality on the inclusive growth process of the selected developing Asian countries. Inclusive growth is a growth process which ensures that everyone is participating and benefited by growth process. Design/methodology/approach This study uses system generalized method of moment to address the problem of endogeneity and omitted variable bias. Findings Empirical results showed that both fiscal policy and institutions have positive effects on inclusive growth. Our empirical results confirmed that fiscal policy can work more efficiently in the presence of good quality institutions in the developing Asian countries. Research limitations/implications Government should take measures to improve infrastructure, roads and transport system, and main share of government expenditures should be allocated to development, education and health projects. There is a need to transform the tax structure of the countries with the huge emphasis on the progressive tax system and this is likely to benefit the lower segment of the population. There is a need to develop institutions as they serve as a road map for the development of a country. There should be coordination between government policies and institutions. Supervision of fiscal policy through good institutions is needed for the proper allocation and utilization of public resources. Practical implications By restructuring the taxation system subject to the provision of quality institutions, government can incentivize entrepreneurs to make significant investments. This creates jobs for lower segment of a society, brings down poverty and increases the income level of a country. This increases the individual and collective welfare of an economy that ensures the inclusive growth within a country. Originality/value In this study, proxies used for fiscal policy are government expenditures and tax revenues as a percentage of gross domestic product (GDP) to examine its impact on the certain measures of inclusive growth such as employment, income inequality and GDP per capita. This study provides useful insights for the policy makers using fiscal policy to achieve the goal of inclusive growth in developing countries.
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PASICHNYI, Mykola. "TAX POLICY IN OECD COUNTIES." WORLD OF FINANCE, no. 1(54) (2018): 127–38. http://dx.doi.org/10.35774/sf2018.01.127.
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Introduction. Globalization intensifies the necessity for intergovernmental cooperation aiming to implement the measures on the tax and customs regulation. Considering both the economic cyclicality and historical retrospective, it is expedient to study the advanced and emerging market economies’ experience in the field of developing and implementing a set of fiscal policy measures during the economic expansion, recession, stagnation, and post-crisis recovery periods. The purposeis to systemize the experience of the government tax policy preparation and implementation in the OECD countries in the long-term retrospective, and to assess the tax structure and the level of taxation impact on economic growth. Results. Based on methods of economic regression to evaluate the fiscal policy in the OECD countries over 1981–2016 period, it was determined that increase in the tax burden did not provoke any significant destructive effect on the economy. At the same time, in the context of the tax structure, the taxes on capital had a negative impact on the real GDP growth rates, the taxes on labor had a lower degree of influence, and the effect of the taxes on consumption was almost neutral. The main measures of the tax regulation aimed to create the most favorable conditions for a long-term economic growth were investigated. The tax revenues structure’s complex analysis was carried out; the main tendencies of taxation were generalized. Conclusion. Tax policy is as an adaptive mechanism allowing to regulate the country’s economic development. The OECD countries consistently implement the systematic measures to reduce the income tax rate. This practice is caused by the need to create the most favorable conditions for the entrepreneurship development. Regarding the universal consumption taxes, a gradual rise in their rates was recorded. That fact is reflected by an increase in these taxes’ fiscal importance (taking into account the neutrality of their impact on the economic agents’ business activity). The transformation in the import operations’ model of taxation as well as the implementation and active intensification of free trade policies led to a reduction in the specific weight of customs duties. In modern conditions, the tax legislation’s unification as well as the strengthening of the supranational tax regulation’s role outline an important trend in the development of taxation systems both in advanced and emerging market economies.
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Damayanti, Theresia Woro, and Supramono Supramono. "Women in control and tax compliance." Gender in Management: An International Journal 34, no. 6 (August 5, 2019): 444–64. http://dx.doi.org/10.1108/gm-06-2018-0071.
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Purpose The study aims to empirically analyze the effects of the presence of female top managers and owners on corporate tax compliance. Design/methodology/approach Data for analysis were sourced from the World Bank Enterprise Surveys that involved 23,178 private firms in 98 countries. The surveys used a stratified random sampling method by using three criteria, namely, firm size, business sector and geographic region, within each country. Further, data are analyzed using the ordinal logistic regression and supported by the marginal effect analysis. Findings The results show that the presence of female top managers and owners is a significant factor that underlies the firm-level tax compliance difference when firms exhibit relatively lower compliance. Practical implications Although this study shows that the determinants of corporate tax compliance are very complex, there are also crucial roles of top managers and owners' gender. This study advises firms to use the gender equality strategy to generate the best human capital, especially in their top management levels. Besides, this study can be helpful in designing policies that facilitate women to reach top managerial levels or to own businesses as an alternative method to enhance tax compliance for developing countries that fail to generate optimal corporate income tax revenues. Originality/value To the best of the authors’ knowledge, no previous studies examine the effects of the presence of female top managers and business owners on firms’ tax compliance policies. This study contributes to extend the understanding of the important role of women in corporate strategic decision-making, especially in taxation policies in various developing countries.
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Baratashvili, Nazi, and Zaza Pharsenadze. "Importance of double taxation to increase export potential of Georgia." Economics, ecology, socium 2, no. 4 (December 31, 2018): 41–52. http://dx.doi.org/10.31520/2616-7107/2018.2.4-5.
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Introduction. According for future economic development of country and creation strong stable political framework is essential to improve international existing mechanism of avoiding double taxation. Double taxation avoidance system is an essential component of good business environment and is a key factor of stimulating investments. Agreements of Double taxation provide legal framework of releasing from double taxation. In spite of that, such exemption is foreseen by the internal law of different countries, international double taxation agreements provides contingency approach.
Aim and tasks. The aim of the article is to study the directions of avoiding double taxation, which contributes to the deepening of economic cooperation between countries and attracting investment. The task is to study and show the positive and negative sides of double tax treaties.
Results. One of the main factor of countries economic development is to promote export. For that every country is interested in incensement of export share per capital in foreign trade. In the article is analysed trends of development of international double taxation principles and forms. Research shows and confirms that an effective legal mechanism in Georgia is still in the process of formation in this field. Trade liberalization contributes to the creation of such flexible mechanisms, which allow developing countries receive maximal benefits from the process of world economic development. Also, Georgia received economic benefits from agreement of Avoidance of Double Taxation, which was signed all parties.
Conclusions. We have to mention that for Georgia is great challenge to increase export share per capital in European Union countries. Georgian has real ability to increase export potential in EU countries. The result of this is deep and comprehensive Free Trade Agreement (DCFTA) with the European Union and agreement of Avoidance of Double Taxation and the Prevention of Fiscal evasion (DTAA) with respect to taxes on income. It promotes to build further new trade economic cooperation between countries by safeguarding the interests of involved countries according the agreement.
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Tanasić, Ljiljana, and Teodor Petrović. "Transfer pricing in a function of abusing tax competition instruments." Skola biznisa, no. 1 (2020): 137–61. http://dx.doi.org/10.5937/skolbiz1-22224.
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The paper focuses on elucidating transfer pricing as a means of tax competition instruments misuse. Tax competition instruments have a key role in creating national tax attractiveness for foreign direct investment. However, in order to protect the local tax base on the basis of abuse of tax competition instruments, a large number of countries apply the principle of sources of income, i.e. taxation of business profits made by a non-resident legal entity exclusively in the country where the business was conducted and revenue generated. But with the process of globalization and the expansion of multinational companies, i.e. related legal entities, the instruments of tax competition have remained a suitable area of legally permitted transfer of profits through the application of transfer pricing. The data presented in the paper indicate that, although the trend of global corporate tax rate (as the dominant instrument of tax competition) has a downward trajectory, there are still fluctuations in rates between countries around the world, including the existing inconsistencies and ambiguities of national tax regulations. Taking this into account, the aim of the paper was to emphasize that transfer prices, through the instruments of tax competition, have threatened the economic, social, and tax stability of individual countries for more than two decades. The paper shows that developed countries have managed, to a certain extent, to gain control over their application by introducing more aggressive tax audits of transfer pricing. However, special attention is paid to developing countries which remain an active source of tax competition instruments abuse through the inadequate application of transfer pricing, due to the lack of adequate regulatory and control mechanisms, financial and human resources, and efforts to attract foreign investment through various instruments of tax competition.
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Kobylnik, Dmytro, and Vladyslav Mykhailenko. "Taxation of IT industry: implementation issues and complexity of implementation." Law and innovations, no. 2 (30) (June 2, 2020): 99–104. http://dx.doi.org/10.37772/2518-1718-2020-2(30)-15.
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Problem setting. This article is devoted to the study of issues of introduction and implementation of taxation mechanisms in IT industry. The subject of the study are the norms of the draft laws proposed for implementation. As IT industry is one of the most developing spheres of the domestic market, the attention in the article is concentrated on the variants of specific taxation of information technologies sector. The attention is also focused on the need to adopt regulations that would not only improve the overall market perception, but also provide the most effective growth opportunities for the IT industry. Target of research. The purpose of this article is to study the issues of profitability and efficiency of tax implementation in accordance with the schemes and options proposed by legislators. It considers the significant shortcomings of the currently available draft laws, taking into account the experience of such initiatives abroad. Analysis of resent researches and publications. Peculiarities of legal regulation of issues of taxation of IT-industry and practice of domestic results of its implementation were the subject of research in the works of G. Androshchuk, A. Bereza, N. Boreyko, V. Glanz, I. Dulskaya, R. Zharko,Yu Kaiser, Yu Lazebnik, S. Malets, N. Prokopenko, S. Ripp, L. Fedulova, K. Swabia, M. Shevchenko, G. Yurchuk etc. Article’s main body. The existing system of taxation of IT technologies services requires improvement through the formation and implementation of a balanced tax policy taking into account the peculiarities of this type of activity and in accordance with the unification of international standards. Application of systematic approaches on the part of the state in the sphere of fiscal policy in respect of tax regulation of IT services can contribute to the development of the industry as a whole and guarantee competitiveness in the international arena. The article points out that the main problems and issues which require more detailed consideration in the taxation of IT services are: the definition of mandatory elements of taxation, the definition of tax jurisdictions and the elimination of double taxation, the formation of a tax on personal income and payment of a single social contribution from the salaries of IT specialists. Conclusions and prospects for the development. The final result, to which the article concludes, is the hypothesis that in order to overcome the above-mentioned problems it is necessary to improve the domestic taxation system, which will clearly regulate the mandatory elements of the state tax policy formation in the field of IT services, taking into account the positive practical experience of competing countries in this area.
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MAKUSHINA, Elena Yu, Dar'ya M. KARMANOVA, and Aleksei S. KUCHER. "Tax reform initiated by D. Trump: Economic and social aspects." Finance and Credit 27, no. 3 (March 30, 2021): 693–720. http://dx.doi.org/10.24891/fc.27.3.693.
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Subject. The article addresses the tax reform of 2017, initiated by D. Trump. Objectives. The aim is to determine the relationship between the total volume of tax revenues to the budget of the U.S. Government and the growth of U.S. GDP in the long run. Methods. To identify the impact of the tax reform on the investment climate in the country and the subsequent GDP growth, we formulate a hypothesis and propose a regression model. The quarterly data from 04.01.1960 to 07.01.2019 serve as a statistical sampling, published by financial departments of the U.S. Office of Management and Budget and the U.S. Bureau of Economic Analysis. The study rests on the econometric analysis enabling to identify the impact of the volume of tax revenues from the corporate income tax and individual income taxes on the level of the GDP of the United States. Results. In the short term, we observe a decrease in tax revenues and a subsequent increase in the budget deficit, in the long term – an increase in business activity of the country, a growth in foreign direct investment, and, consequently, an increase in the GDP. The paper offers a model for assessing the economic growth of the GDP of the United States, in which tax predictors were used in combination with macroeconomic indicators. Conclusions. The experience of the United States and the results of this study may be used by the governments of developing countries and experts in the field of taxation for tax policy development.
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Karim, Mohamed, Mohamed Bouzahzah, and Othmane Erguigue. "The Tax Burden and Economic Growth in Morocco: Empirical Analysis." Journal of Economics and Public Finance 7, no. 1 (December 4, 2020): p1. http://dx.doi.org/10.22158/jepf.v7n1p1.
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The tax burden in Morocco has an important place, both in the political arena and in the media. These debates are often based on the identification of the tax burden in the economy. Moreover, taxation plays a key role in achieving the objectives of the State’s social and economic policy. Because its main role is to collect resources to supply the state budget to meet multiple obligations, taxes have an economic role (correcting market inefficiencies in resource allocation) and a social role (reducing inequalities through income redistribution, social equity...). The paper uses to identify the Laffer growth curve and determine the optimal tax rate maximizing economic growth for the Moroccan economy we used econometric techniques. This empirical study covered the period from 1990 to 2018. However, a high tax rate can influence the macroeconomic performance of the state as in the case of Morocco, since Morocco ranks among the developing countries with a high tax burden, the latter defines the relative importance of taxes and duties (or compulsory levies, such as social insurance contributions on wages) in the national economy based on the tax rate which is considered the most relevant economic indicator. The challenge is to find an optimal tax rate that stimulates economic growth while at the same time achieving fairness and equity in our tax system.
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Parente, Salvatore Antonello. "TAX PROFILES OF THE DIGITAL ECONOMY." Civitas et Lex 21, no. 1 (May 12, 2019): 55–69. http://dx.doi.org/10.31648/cetl.2994.
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Computer science and technological developments of the last decades has impacted considerably on the forms and methods of production and circulation of wealth, encouraging the spread of new activities completely dematerialized within a social and economic context characterized by frenetic circulation of knowledge and information available than just a "click" and from a production, distribution and consumption of goods increasingly virtual and intangible.
As activities that might acquire economic value, in terms of tax, we wondered if, in order to face emergencies raised by virtual economy, is sufficient to adapt existing fiscal instruments or is necessary, rather, developing new forms of levy, creating a virtual world taxation.
Special emphasis hiring then tax profiles of the activities carried out by large multinational companies, digital society, with subsidiaries in several countries, that can produce very high incomes, hardly taxed in the source State or otherwise frequently taxed to a lesser extent than the ordinary tax regime. The Italian legal system has tried to remedy this widespread phenomenon, with timid actions which seek to establish, first, a Google tax, then a digital tax, before arriving to the web tax, recently adopted in two different subsequent versions (before “digital transactions tax” and after “digital services tax”), but characterized by an uncertain future.
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Martins, António. "The Portuguese intellectual property box: issues in designing investment incentives." Journal of International Trade Law and Policy 17, no. 3 (September 17, 2018): 86–102. http://dx.doi.org/10.1108/jitlp-11-2017-0044.
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Purpose The purpose of this paper is to discuss tax and accounting issues related to the evolution of the intellectual property box in Portugal and present a preliminary view of its impact. In 2014, Portugal adopted an Intellectual Property (IP) box, exempting from corporate taxation half of the gross revenue obtained from selling IP rights. In 2016, the country adopted a new IP regime, in line with BEPS’ recommendations, with stricter rules for exempting income. The “modified nexus approach”, recommended by the OECD, was the cornerstone of legal changes. The research questions addressed in this paper are as follows: was the Portuguese IP box, set up in 2014, internationally competitive in terms of the scope of qualifying assets and the tax rate when compared to other EU countries? Could its legal design induce potential corporate tax avoidance? Does the new IP box framework reduce avoidance opportunities and does it increase tax and accounting complexity for companies and tax auditors? Design/methodology/approach The methodology used in this paper is based on the legal research method combined with a case study analysis of the IP box in Portugal. The economic motivation for legal changes, the interaction between the tax authorities and the policy makers in the wake of BEPS’ recommendations, and the economic crisis that Portugal faced, influenced legislative options. A multidisciplinary approach is required to analyse the IP box modifications, and the methodology follows this line of enquiry. Findings The author concludes that the 2014 IP box was not competitive in terms of the scope of qualifying assets and the tax rate. However, it could be a potential tool for tax avoidance, mainly linked to transfer pricing strategies. Legal changes, introduced in 2016, by enacting stricter rules for granting tax benefits, fit a worldwide trend of restraining profit shifting opportunities linked to intangibles. The new framework clearly impacts tax and accounting complexity, for companies and tax auditors. Preliminary data, for 2014 and 2015, show a negligible impact of the IP box on corporate taxation. Practical implications The “modified nexus approach” is not a definitive panacea for fighting tax avoidance. Multinationals may move resources (e.g. highly specialized persons) to entities that are developing IP, curtailing the restriction associated with acquiring services from related parties. Tax authorities may fight these schemes, but face a challenging task. The grandfathering option and new accounting choices related to expense allocation are delicate issues. Not all countries adopted BEPS’ recommendations at the same time, which may impact international profit shifting activities and increase tax authorities’ costs to control them. The paper also provides preliminary and exploratory evidence that IP boxes, per se, do not suddenly raise the R&D activity of firms. Originality/value The analysis highlights legal, accounting and economic issues in dealing with changes in investment incentives and can or may be a useful remainder for countries in the process of setting up, or amending, IP boxes.
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Pogorletskiy, A. I., and N. V. Pokrovskaia. "Comparative Analysis of Fiscal Regulation Measures of the G20 Countries in the Era of the Coronavirus Crisis and in the Post-Coronavirus Perspective." Journal of Applied Economic Research 20, no. 1 (2021): 31–61. http://dx.doi.org/10.15826/vestnik.2021.20.1.002.
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The article seeks to describe the features of fiscal policy during the Covid-19 pandemic. The research subject is the developed and developing countries of the G20 Group. The purpose of the article is to show an increasing importance of fiscal regulation measures in the era of the coronavirus crisis and in the post-coronavirus future, while noting the special role of taxation, which in modern conditions is given an important role in the toolkit for replenishing the revenue of state budgets of the leading countries of the world. The hypothesis of the research is that fiscal policy in the modern world acquires a qualitatively different meaning, becoming a priority of state regulation in the field of public finance, shifting the emphasis from the previous priority of monetary policy measures. Based on the generalization of the Covid-19 consequences on the economy and public finances and the experience of overcoming crises, the key postulates of modern fiscal policy were substantiated: clear socially oriented focus; focus on neutralizing excess income of companies that managed to take advantage of their technological advantages during the pandemic; a combination of support for the population by growing government spending and the use of tougher tax pressure on those who managed to get rich during the coronavirus crisis; consistency of the national fiscal policy of the post-Covid recovery period with the policies of other countries of the world. Summarizing the experience of implementing fiscal policy in China, Japan and Korea since the early 2020s made it possible to highlight the differences between countries in the tax response to the pandemic, as well as to the recovery after it: the planned tax cut in China, the issuance of corona bonds in Japan, tax incentives for certain sectors of the economy against the background of an increase of PIT rate in Korea. The study of fiscal policy during the Covid-19 pandemic based on data from national financial statistics is of interest for future research.
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ZEYNALOVA, Zivar Z. "Service Functions of Tax Regulation for the Purposes of State Development in the Globalized Environment." Journal of Advanced Research in Law and Economics 10, no. 7 (December 31, 2019): 2190. http://dx.doi.org/10.14505/jarle.v10.7(45).34.
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The tax regulation is an important element of creation and distribution of the qualitative budgeting of a city or a state. Tax regulation allows evenly distributing the existing resources and thus ensuring the gradual development of a state. The task of legal regulation is to ensure the equal distribution of the tax burden and the formation of the integral perception on the part of the population of the suggested regulatory measures. The search of the equilibrium and the formation of the system of legal regulation based on the analysis of the best practices of the European states forms the relevance of the study. The novelty of the study is defined by the fact that to a greater extent, the formation of the model of sufficient tax regulation is possible if it is a targeted indicator of the social and economic development of the state. The authors of the paper except for analyzing the taxation systems of the majority of the EU states also define the way necessary for the implementation of the legislation elements in the states of the post-Soviet territory. According to the authors, it will allow to a greater extent define how the tax incomes should be distributed. The practical significance of the study is defined by the fact that at the implementation of the paper’s conclusions one may precisely define that different distribution of the funds will allow to a greater extent feasibly reforming the tax legislation in the developing countries.
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Abu-Zaineh, Mohammad, Sameera Awawda, and Bruno Ventelou. "Who bears the burden of universal health coverage? An assessment of alternative financing policies using an overlapping-generations general equilibrium model." Health Policy and Planning 35, no. 7 (June 18, 2020): 867–77. http://dx.doi.org/10.1093/heapol/czaa041.
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Abstract In their quest for universal health coverage (UHC), many developing countries use alternative financing strategies including general revenues to expand health coverage to the whole population. Unless a policy adjustment is undertaken, future generations may foot the bill of the UHC. This raises the important policy questions of who bears the burden of UHC and whether the UHC-fiscal stance is sustainable in the long term. These two questions are addressed using an overlapping generations model within a general equilibrium (OLG-CGE) framework applied to Palestine. We assess and compare alternative ways of financing the UHC-ridden deficit (viz. deferred-debt, current and phased-manner finance) and their implications on fiscal sustainability and intergenerational inequalities. The policy instruments examined include direct labour-income tax and indirect consumption taxes as well as health insurance contributions. Results show that in the absence of any policy adjustment, the implementation of UHC would explode the fiscal deficit and debt-GDP ratio. This indicates that the UHC-fiscal stance is rather unsustainable in the long term, thus, calling for a policy adjustment to service the UHC debt. Among the policies we examined, a current rather than deferred-debt finance through consumption taxation emerged to be preferred over other policies in terms of its implications for both fiscal sustainability and intergenerational inequality.
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Matavulj, Ljiljana. "Calculation of transfer prices: Theoretical and practical implications on the result." Ekonomika 67, no. 1 (2021): 57–75. http://dx.doi.org/10.5937/ekonomika2101059m.
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With the increase in the volume of international exchange and the globalization of multinational companies, problems of transfer pricing control in transactions between affiliates and their alignment with the "arm's length" pricing principle are growing. A proper calculation of transfer pricing affects the amount of taxable income and provides a basis for checking whether in this way profit is "extracted" to other tax jurisdictions. The international transfer pricing guidelines have recommended several methods for calculating transfer prices, depending on the circumstances of the case, including several recommended parameters relevant to the calculation. Also, if the Cost Plus Margin method and Transactional Net Margin (TNM) method can be applied in an equally reliable manner, the recommendation is Cost Plus Margin. Many countries have accepted the international guidelines and incorporated them into their national regulations. However, in the absence of a serious analysis of the effects in practice, the possibility of deviations in the calculation of results was also accepted. If these results are ultimately the amount of tax paid or not paid in a country, then it is understandable why these deviations deserve special attention. The main hypothesis in this paper is that when both methods are applicable, the Cost Plus Margin method should not always be favored, as effects that should be prevented may occur. Due to the circumstances of the case, a proper calculation can be very debatable if certain parameters change a minimum. The paper discusses deviations of the transfer price from the "arm's length" principle when both methods are equally acceptable, and with minimum changes to two parameters: the size of the sample of comparable companies and the observation period. All this has been tested on the example of a multinational company from one of the developed countries in Europe, which has a related entity in one of Europe's developing countries. The tested party is a related entity as a developing country taxpayer. In the implication generally there are many problems and dilemmas that need to be overcome in the relationships between the party calculating the transfer prices, the companies themselves, and the tax administrations. It is very significant from which aspect the calculation is managed. If the aspect of the company is favored, then the best option is the one where the company will pay the lowest tax. However, if the tax administration is already authorized to request a change in the calculation, then it will work in the interest of the state, and the most unfavorable option for the corporation may be obtained by changing some of the parameters used. Both would be formally acceptable, but the tax amount would not be the same. Possible scenarios in the test case showed that internationally recognized recommendations regarding method selection have weaknesses because they do not include all the parameters of the methodology, which significantly affects the end result. In a situation where the observation timeframe is flexible and no minimum sample size of comparable companies is defined, there is practically space to manipulate the final result. In order to avoid ambiguity and various forms of manipulation in the transfer pricing calculation, it is necessary to further specify international guidelines for the development of transfer pricing in the domain of time and size of the sample. Additionally, the taxpayer's obligation to apply transfer price calculations should be introduced for all methods that respond to the circumstances of their case, and not just one of them. This generally can be overcome either by changing the guidelines or by defining rules in greater detail at the level of the depends on multiple parameters, both those defined in theory and those that are not national legislation of each state, whilst improving the professional capacity of the tax administration to control transfer pricing. Purpose - The importance of properly calculating transfer pricing is emphasized, which depends on multiple parameters, both those defined in theory and those that are not, but should be. International guidelines recommend several methods for calculating transfer pricing, and which one should be given priority if two of them are equally acceptable? If they are TNM and Cost Plus, the latter takes precedence. The purpose of the paper is to show that in practice this may not be the case, which is the basic hypothesis on which it is based. Research design/method/approach - The paper first considers the existing international methodology for calculating transfer prices and then the issue of calculation in practice in the case of minimal deviation of two significant components of comparability: sample size and time dimension of parameters. All this will be tested on the example of a multinational company from one of the developed European countries, which has a related party in one of the developing countries in Europe. The test party is a related entity of a taxpayer in a developing country. Several calculation scenarios are given for case of the aforementioned changes, which give different tax amounts. If a developing country accepts (by including in national regulations) an international recommendation on the advantage of the Cost Plus method, it will have accepted that in practice it will in some cases charge a smaller tax. Findings - The hypothesis was confirmed that the Cost Plus method should not always take precedence over the TNM method. A more detailed analysis of the different scenarios for the particular circumstances of the case gives wider opportunities to properly determine the basis for taxation but also to prevent the country's tax losses. An argument is also given for defining national regulations in more detail to avoid unwanted occurrences. Practical implication - It is necessary to amend international guidelines and national tax regulations, as well as to increase the professional capacity of the tax administration in this area. This will increase the control of transfer pricing, as well as the "extraction" of profits from the country to other tax jurisdictions Originality/Value - Theory and practice need to be more connected. Practical examples show that some changes need to be made in this area to more effectively prevent tax evasion. There are many objections to the existing concept of transfer pricing in literature, but no similar practical examples and studies are available to confirm deviations in the calculation as outlined in this paper.
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LAIKO, O. I., V. P. TALPA, and Z. V. CHECHOVICH. "THE ROLE OF LOCAL TAXES IN STIMULATING ECONOMIC COOPERATION OF TERRITORIAL COMMUNITIES." Economic innovations 22, no. 3(76) (September 20, 2020): 53–66. http://dx.doi.org/10.31520/ei.2020.22.3(76).53-66.
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Topicality. Local taxes and fees are a means of filling basic budgets not only in the direct sense, when the fiscal function of such taxes is performed but also when the regulatory function of such taxes is activated and local authorities have the opportunity to improve the business climate of their economic mesosystem and change its structure, giving preference to the most promising types of economic activity. Currently, Ukraine has adopted a general institutional framework that makes it possible to conduct economic cooperation of territorial communities, but the provisions of legislative, methodological, advisory nature on the use of local taxes as stimulators of interregional cooperation and activators of cooperation agreements that are based on added value and effective involvement of local resources in the process of exogenous economic exchange have not yet been developed. Therefore, solving such scientific and applied problem as the development of guidelines for the use of local taxes as tools of stimulation of economic cooperation of communities and increase the added value generated in their territorial and economic systems is actual topic of national and international research on regional systems for developing or developed countries, where the role of local economic and administrative initiatives is incompletely realized. Aim and tasks. The purpose of this paper is to identify the scientific and methodological basis on the use of local taxes as regulators of business activity and activators of economic cooperation and means of increase of added value, establishing of the list of key local taxes through which it is possible to implement regulatory measures and identify types and groups of taxes, which are the most effective means of influencing business activity, from the standpoint of stimulating economic cooperation and the formation of horizontal ties between the participants of cooperation and division of labor in territorial communities. Research results. Theoretical, institutional and scientific-applied bases of economic cooperation of territorial-economic systems in Ukraine and other countries of the world are considered. It is established that the implementation of interregional, intraregional and international cooperation of communities has a positive effect on the level of economic development, as the formation of points of concentration of capital and business activity increases economic growth, uses local resources more efficiently, increases added value and depth of raw materials processing and there is the active involvement of territories in the processes of the international division of labor. Due to the points of economic growth formed based on economic cooperation in the form of agglomerations, clusters, subregions and other forms of territorial economic associations for the developed countries of the world (Austria, Spain, Germany, Great Britain) the predominant of gross product creation (from 50% to 70 %) became characteristic in such territorial and economic associations. Based on the analysis of the regulatory framework and other components of institutional support for economic cooperation in the developed world, it is determined that the general institutional framework and legalization of the instrument of cooperation for effective economic development is not enough, as levers of state regulation and realization the supporting means should be introduced. In this aspect, special attention is paid to local taxes and fees, because the initiatives of local authorities must be supported by certain powers to regulate the economic development of communities. The most effective at the present stage of development of domestic territorial and economic systems in Ukraine as regulators can be used such local taxes as a single tax on entrepreneurs, land fees and real estate tax. A mechanism for stimulating economic cooperation in communities with the use of personal income tax, which is national, but ensures the incomes collection of local budgets by almost 60%, has also been identified and proposed. An approach to the implementation of simplified and reduced taxation of a number of local taxes in promising investment projects is proposed. But such means are provided only for the projects that keep the level of wages 2.5-3 times higher than the average wage in the region, which will increase the welfare of the population and will provide filling local budgets by increasing the base for personal income tax. Conclusion. Scientific and methodological recommendations for tax incentives for economic cooperation of territorial communities in Ukraine are still under development and formation, but the solution to this problem is a promising area of research. The list of basic local taxes that can be used to enhance cooperation between local communities, the key incentives for the application of targeted benefits from local taxes, should be supplemented by regulatory policy means in further research on this topic.
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Dauylbaev, K., G. Kaliyeva, T. Tasmaganbetov, Z. Esszhanova, and A. Masabaeva. "THE IMPACT OF THE ACTIVITIES OF NON-RESIDENTS BANKS ON THE NATIONAL ECONOMY." REPORTS 2, no. 330 (April 15, 2020): 114–24. http://dx.doi.org/10.32014/2020.2518-1483.39.
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The paper examines the effectiveness of the operations of non-resident banks in Kazakhstan. Performance assessment of non-resident banks in the local banking market is based on the model developed by the authors. The model is based on the indicators of the system of national accounts, and includes three stages of analysis: evaluation of the impact on real economy, estimation of performance of the intermediation function of a bank and the assessment of the bank’s stability. The object of study is Russian commercial banks operating in the Republic of Kazakhstan. In the study, the major factors contributing to the development of Russian banks in the financial market of the Republic of Kazakhstan are identified. In the present day circumstances all countries in the world experience the impact of the dynamic processes of globalization and integration. It differs from country to country: these processes have a considerable, often adverse, impact on developing countries, as indicated by some prominent economists, for example, J. Stiglitz [1]. Promotion of regional economic integration in its essence is considered only with regard to trade and partly investment cooperation. At the same time, undeservedly less attention is paid to the activities of commercial banks as to important financial intermediaries participating in the replenishment process. In these circumstances, it is important to analyze the issues associated with the improvement of performance efficiency of non-resident bank in the Kazakhstan banking sector. The aim of the paper is to investigate the impact of the activities of non-resident banks on the national economy and to develop an adequate methodology for their efficiency assessment. The choice of the object has been determined by the following preconditions: integration economic development of the two countries; the transition of both countries to the innovative model of development and restructuring of the national economy, development of the legal and institutional infrastructure for establishment of the common financial area between the two counties; functioning of the Customs Union since 1 January, 2010, the presence of favorable financial conditions for the participation of Russian banks in the banking market of Kazakhstan and other factors. The research methods used in this paper are: systematic approach, statistical, logical, and comparative analysis of the scientific literature, the analysis of bank annual reports. The analysis revealed that the Russian banks in Kazakhstan are actively encouraging the sphere of circulation, increasing inflation in the country. The Russian banks in Kazakhstan contribute to increase of redistribution of incomes, but do not develop the real sector and its innovation component in the Republic of Kazakhstan. The object of the research is Russian banking capital in the Kazakhstan market. The choice of the object has been determined by the following pre-conditions: Integrated economic development of the two countries that provides for mutual commercial, economic, and cultural relations; The transition of both countries to the innovative model of economic development and restructuring of the national economy; Growing congruence between two countries with regard to the level of socio-economic development, selected models and resources for economic development; Cooperation between the countries under discussion in the field of the planned synchronization of the WTO accession process; Development of the legal and institutional infrastructure for establishment of the common financial area between the two counties; Functioning of the Customs Union since 1 January, 2010, and other factors. Financial pre-conditions for the development of the favorable environment for participation of the Russian banks in the Kazakhstan market include: Uniformity of taxation systems of both countries, establishment of the national taxation systems on the basis of the Tax Code and their unification, identical elements in the taxation systems, coordinated reforms of the taxation systems; Considerable uniformity in the field of state finances: codification and harmonization of budgeting legislation on common principles; Current macroeconomic indicators pointing at the convergence of the economic development trends in the two countries: inflation rate, average weighted rate on long-term loans, public debt, etc. The level of development of the two countries is similar considering basic economic indicators; Provision of sufficient economic stability as a necessary premise for implementation of coordinated structural reforms of the economies of the two countries; Transition of the economies of both countries to the innovative development model and establishment of the common innovation space based on the usage of production, intellectual, technical and scientific potential of two states; Harmonization and unification of customs tariff policies aimed at support of new manufacturing enterprises and increase of investment potential of particular industries and agriculture.
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TULAI, Oksana, and Andrii YAMELYNETS. "PERSONAL INCOME TAX: EXPERIENCE OF FOREIGN COUNTRIES." WORLD OF FINANCE, no. 1(58) (2019): 76–86. http://dx.doi.org/10.35774/sf2019.01.076.
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Introduction. In the current conditions of the integration movement of Ukraine to the European Union and the reform of the institutions of state power, the issue of studying foreign experience of the system of taxation of individuals' incomes is actualized. The application of effective practices of other states will contribute to increasing the fiscal role of the personal income tax in Ukraine, reducing social inequality and increasing the welfare of the population. Purpose. The purpose of the article is to find out the features, trends and problems of the functioning of the personal income tax in foreign countries. Results. The article deals with the foreign experience of functioning of the system of personal income taxation. The role and role of PIT in the EU and OECD countries is shown. The proportional and progressive approach to taxation of this tax is considered, their key advantages and disadvantages are determined. An analogy has been made between the European states, the OECD member states and Ukraine. The objective necessity of establishing a non-taxable minimum or partial exemption of citizens' incomes from taxes in the context of support of low-income categories of the population and ensuring social justice is substantiated. Conclusions. It is concluded that in developed countries, the progressive system of taxation of the PIT along with the minimum non-taxable minimum is an effective tool for generating budget revenues and solving social inequalities in society. Instead, third-world states can not use this mechanism in a qualitative way due to significant tax compliance problems. They apply a proportional taxation system for PIT that minimizes tax evasion and international competitiveness.
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Bikas, Egidijus, Rasa Subačienė, Ieva Astrauskaitė, and Greta Keliuotytė-Staniulėnienė. "EVALUATION OF THE PERSONAL INCOME PROGRESSIVE TAXATION AND THE SIZE OF TAX-EXEMPT AMOUNT IN LITHUANIA." Ekonomika 93, no. 3 (January 1, 2014): 84–101. http://dx.doi.org/10.15388/ekon.2014.0.3882.
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The tax systems of the European Union countries differ in many features. However, for taxing personal income, many EU countries use the method of progressive taxation. Progressive taxation is aimed to shift the tax burden from those with a relatively low income to those whose income is sufficiently high. Such personal income taxation system creates the prerequisites for social justice. In addition to different income tax rates, in a progressive tax system, a crucial role is played by the size of tax-exempt amount. In this article, personal income progressive taxation and the tax-exempt amount are analyzed as one of the progressive taxation tools. The study was conducted using the method of descriptive analysis as well as forecasting and modeling techniques.
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TKACHYK, Fedir, and Victoriia OSTAPCHUK. "EUROPEAN PRIORITIES FOR PERSONAL INCOME TAXATION." WORLD OF FINANCE, no. 2(63) (2020): 77–87. http://dx.doi.org/10.35774/sf2020.02.077.
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Introduction. In the current conditions of globalization of socio-economic development and formation of a new financial civilization, social aspects of tax policy take a important place. The system of taxation of income of citizens in Ukraine today is not fully coping with the performance of their functions. The experience of developed European countries on the formation of an effective mechanism of taxation of personal income will contribute to the establishment of the newest social and fiscal-oriented paradigm of taxation of citizens in Ukraine. The increased interest in the procedures for administering the personal income tax is also explained by the fact that this tax is one of the main sources of income to the budget of Ukraine. The purpose is to determine the peculiarities of taxation of personal income tax in Ukraine, to find out the common and different features tax system in Ukraine and European countries, to systematize recommendations on improving the mechanism of taxation of personal income. Results. The international typology of personal income tax systems is given. The general features of personal income taxation and mechanisms of application of personal income tax rates in some countries of the European Union are considered. It is argued that the implementation of the European tax experience will facilitate a faster transition to a new and effective system of personal income taxation in Ukraine. To improve personal income taxation in Ukraine, it is necessary to revise personal income tax rates, increase the amount of tax-free minimum incomes, ensure the full functioning of electronic declaration of personal incomes, optimize concessional policies, increase tax literacy and tax culture. Prospects. Further research will focus on the social aspects of taxing citizens' income in terms of differentiation of tax rates, the logic of using preferences in taxing personal income, the introduction of an effective threshold of the non-taxable minimum income, promoting the right to tax rebates, etc.
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Korneev, V. V., V. Y. Khaustova, and A. O. Khodzhaian. "Progressive Taxation of Individual Income in Islamic Countries." PROBLEMS OF ECONOMY 2, no. 48 (2021): 187–93. http://dx.doi.org/10.32983/2222-0712-2021-2-187-193.
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The economic results of the development of Muslim countries have raised the question of the existence of an increasingly focused Islamic financial and tax model. Taxes in the Islamic economic model provide an implicit link in the relations between the state and individuals, thus determining the limits of conditioned freedom and mutual obligations. The article is aimed at identifying the indicative features of progressive taxation of individual income in some Islamic countries. The research results show that Islamic countries are characterized by the unity of religion (faith) and such elements of the social system as the organization of power, as well as family, economic and other relations. The boundaries of the personal and the public, the individual and the national are transparent and strictly regulated. The peculiarities of the Tax Institute in Muslim countries, terms of taxation and tax usage rules are considered. It is proven that nowadays approaches to taxation in Islamic countries are diverse. It is determined that progressive taxation of individual income is widely used in Turkey, Pakistan, Tunisia, Indonesia, Nigeria, and other countries, and partly in Saudi Arabia; "tax heavens" are typical for the UAE, Kuwait, Qatar, Bahrain, and Omani; proportional taxation is still used in Malaysia, Sudan, and Kazakhstan. The main types of taxes in Muslim countries are analyzed, their evolution is studied. Modern foci of progressive taxation of individual incomes in specific Muslim countries are revealed. The advantages of the Islamic financial model in terms of tax policy modernization and compliance with tax discipline, unconditional fulfillment of obligations and concluded agreements are identified. It is substantiated that using some elements of the progressive tax scale applied in the practice of Islamic finance can prove useful in a number of areas, providing budgetary and social balance in the "corridor of opportunities", bringing mutual responsibility of citizens and the state in fulfilling obligations, creating an annuity and mutually beneficial economic behavior pattern. It is proved that the progressive tax withdrawal of a part of large incomes will give a restrictive and restraining result of control over their redistribution in the public interest, as the socio-economic behavior of individuals, their powers and responsibilities must be balanced
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Domonkos, Stefan. "Who Wants a Progressive Income Tax?" East European Politics and Societies: and Cultures 30, no. 2 (October 1, 2015): 423–48. http://dx.doi.org/10.1177/0888325415602055.
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Using multi-level modeling, this study investigates the determinants of public opinion on personal income taxation (PIT) in Central and Eastern European countries. The analysis finds that socio-economic and demographic variables, such as household income, occupational social class, and age, are important in determining PIT preferences. However, beliefs about fairness and perceptions of corruption also play a significant role. Support for progressive taxation decreases with the acceptance of income differences as a reward for talent and effort. Also, distrust of the legal system and a conviction that tax authorities treat certain people more favorably than others increase support for progressive taxation, although this latter effect is constrained to the less affluent. These results indicate that progressive PIT might be understood by the public as a corrective measure vis-à-vis inequalities arising due to corruption. The study finds little evidence for the importance of country-level variables, such as income inequality or the institutional features of income tax systems. Nevertheless, there is a moderately strong association between overall economic development and average support for progressive taxation. The public in less developed post-socialist countries are more in favor of non-redistributive forms of taxation, such as the flat tax and lump-sum taxation. This tendency may reflect their increased willingness to accept neoliberal reforms under circumstances of growing pressure to improve the international competitiveness of the domestic economy.
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Gruziel, Kinga, and Małgorzata Raczkowska. "The Taxation of Agriculture in the European Union Countries." Zeszyty Naukowe SGGW w Warszawie - Problemy Rolnictwa Światowego 18(33), no. 4 (December 28, 2018): 162–74. http://dx.doi.org/10.22630/prs.2018.18.4.107.
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The paper sets out the key principles for taxation of agriculture in selected European Union countries. The theoretical foundations of tax systems in the context of their functions and features specified as desirable in the literature are discussed. EU agricultural taxation systems are presented in reference to optimisation and tax competitiveness. Some shared features of these agricultural taxation systems were pointed out and their division in two basic models (the British model and the continental model), which was presented taking as example the countries in which these models operate. Taxation of income derived from agricultural business activity is a natural direction of changes in tax systems. The tax policy implemented in the European Union countries in relation to agriculture make use of the principle of tax justice to the highest possible extent. The diversity of the tax rules and structures applied in the EU makes it possible to tax agricultural income without limiting the development potential of agricultural enterprises (farms), and often stimulates them. The form of individual tax systems results from numerous economic, social and political circumstances. Special tax treatment of agriculture is expressed through tax construction elements, e.g. right to deduct the value of generated loss or investment expenditure from taxable income.
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Kalendienė, Jonė, and Violeta Pukelienė. "TAXATION AND ECONOMIC SUSTAINABILITY." Ekonomika 90, no. 4 (January 1, 2011): 63–75. http://dx.doi.org/10.15388/ekon.2011.0.924.
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Macroeconomic theory says that taxes play a repressing role in an economy. Introduction of new forms of taxation, the increase of tax rates and augmentation of tax income of the Government puts a downturn risk on consumption and therefore on economic growth. Knowing that, governments of different countries start to competing among themselves by lowering corporate tax rates and trying to boost economic growth by using foreign investments. On the other hand governments are pushed to lower personal tax rates in order to satisfy their electorate. It has been strongly believed that countries with lower tax rates have better prospects for the future growth. However, small tax income is limiting governmental spending and might cause serious imbalances in the economy. As the Irish example shows, smaller taxes cannot guarantee a sustainable growth of the economy. Thus, the relationship between taxation and economic development needs rethinking.This study aimed to test the efficiency of taxation in terms of sustainable economic development and to discuss the factors that are the most important here.A comparative analysis of EU countries was used in the research. The results suggest that the harmfully small tax rates could have violated the sustainability of some European economies.
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Vítek, Leoš. "Changes in the taxation of personal and corporate income in developed countries." Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis 60, no. 2 (2012): 465–74. http://dx.doi.org/10.11118/actaun201260020465.
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Over the past ten years, the tax policies have responded in two stages: for the period of a swift economic growth by 2008, and during the rapid economic recession over the period of 2009–2010. In the first part of the paper, we summarise changes in the businesses environment in developed countries. In its second part, the paper discuses changes of the personal and corporate taxation in developed countries, their structure and impacts of the economic crisis on the tax revenues and tax structures. The last part analyses and discusses changes in the tax policy in the field of business and labour taxation. Our results show that the business taxation, compared to the personal taxation, depends stronger on the economic cycle. Although the structure of tax revenues in the developed countries has not changed significantly over the past ten years, decreasing of the personal and corporate tax rates has stopped.
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Iosifidi, Maria, and Nikolaos Mylonidis. "Relative effective taxation and income inequality: Evidence from OECD countries." Journal of European Social Policy 27, no. 1 (January 25, 2017): 57–76. http://dx.doi.org/10.1177/0958928716672182.
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Using a panel data set of effective tax rates that are directly comparable across Organization for Economic Co-operation and Development (OECD) countries and over time, we investigate the redistributive effect of labour, consumption and capital tax rates. We show that what matters from a redistributive standpoint is the tax mix rather than the tax rates in isolation from the rest. The results suggest that increasing the tax burden on labour or consumption relative to capital leads to higher income inequality. In contrast, greater reliance on labour taxes relative to consumption taxes improves income equality. This effect likely stems from the redistributive objectives of social security contributions incorporated in labour taxes.
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Moździerz, Anna. "Tax Policy and Income Inequality in the Visegrad Countries." Naše gospodarstvo/Our economy 61, no. 6 (December 1, 2015): 12–18. http://dx.doi.org/10.1515/ngoe-2015-0022.
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Abstract The financialisation of economies is believed to be the primary cause of the increase in income inequality in the world, occurring on a scale unseen for more than 30 years. One can hypothesise that it is the state that is responsible for the widening inequality, as the state has not sufficiently used the redistributive function of taxation. The purpose of this paper is to study the impact of tax policy on income inequality in Poland, the Czech Republic, Slovakia and Hungary. These so-called Visegrad countries have, in the last several years, carried out some controversial experiments with tax policy, specifically in terms of the flattening of tax progressivity or its replacement with a flat tax, which led to the weakening of the income adjustment mechanism. The imbalance between income tax and consumption tax has contributed to perpetuating income inequality. The verification of tax systems carried out during the recent financial crisis has forced the countries included in this research to implement tax reforms. The introduced changes caused various fiscal and redistributive effects. Analyses show that the changes in income taxation and an increase in the consumption tax rate had the most negative impact on the income and asset situation in Hungary.
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Mathews, R. L. "Tax Reform in English-Speaking Countries." Environment and Planning C: Government and Policy 6, no. 1 (March 1988): 1–6. http://dx.doi.org/10.1068/c060001.
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In this paper, six papers are introduced which deal with issues in tax reform and with recent developments in taxation policies in five English-speaking countries—the United Kingdom, Ireland, the United States of America (USA), Australia, and New Zealand. It is shown that the structure of the taxation systems in these countries, in particular the dominating influence of a highly progressive personal income tax, has played a major part in inducing widespread tax avoidance and evasion, and thereby in corrupting and discrediting the tax systems of the countries in question; so that they operate perversely with respect to equity, to efficiency, and to the other objectives of taxation policy. In the paper the author argues that tax effectiveness needs to be elevated to a position of overriding importance in the design of taxation policies; outlines the kinds of reforms which are necessary in order to give effect to generally accepted economic criteria; and discusses the importance of political and other constraints on tax reform.