...Asia-Pacific Development Journal Vol. 8, No. 1, June 2001 ISSUES IN TAX REFORMS Azizul Islam* This paper seeks to describe the principles that have guided recent tax reforms in Asian developing countries. It critically examines the purported rationale underlying these reforms and raises some issues connected with these reforms. The paper first discusses the new direction of the perceived role of taxation as a macroeconomic tool and the principles which have formed the basis of recent tax reforms. It then analyses the implications of the application of these principles for the level and structure of taxes. It concludes with a summary of the key issues raised in the paper. Developing countries implemented an array of major economic reforms during the 1980s and the 1990s. Tax reforms formed an integral part of these reforms. The impetus for tax reforms was provided by a number of domestic and external factors (ADB, 1993). The last two decades were marked by a fundamental reassessment in developing countries of the role of the Government in economic development. There was a discernible shift in favour of assigning a greater role to the private sector, including foreign enterprises. This required re-examination of the structure of tax systems. Faced with declining external assistance, many Governments came under pressure to reduce budgetary deficits in the interest of macroeconomic stability. Multilateral development agencies required deficit reduction as a precondition...
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...TAXATION PAPERS WORKING PAPER N.33 - 2012 Serena Fatica Thomas Hemmelgarn Gaëtan Nicodème The Debt-Equity Tax Bias: consequences and solutions Taxation and customs union Taxation Papers are written by the staff of the European Commission's Directorate-General for Taxation and Customs Union, or by experts working in association with them. Taxation Papers are intended to increase awareness of the work being done by the staff and to seek comments and suggestions for further analyses. The views expressed in the Taxation Papers are solely those of the authors and do not necessarily reflect the views of the European Commission. Comments and inquiries should be addressed to: TAXUD TAXATION-PAPERS@ec.europa.eu Cover photo made by Milan Pein Despite all our efforts, we have not yet succeeded in identifying the authors and rights holders for some of the images. If you believe that you may be a rights holder, we invite you to contact the Central Audiovisual Library of the European Commission. This paper is available in English only. Europe Direct is a service to help you find answers to your questions about the European Union Freephone number: 00 800 6 7 8 9 10 11 A great deal of additional information on the European Union is available on the Internet. It can be accessed through EUROPA at: http://europa.eu. For information on EU tax policy visit the European Commission's website at: http://ec.europa.eu/taxation_customs/taxation/index_en.htm ...
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...Management Studies - IJEBMS ISSN: 2226-4809; EISSN: 2304- 6945 Vol. 2, No.1 (January, 2013) 12-19 Indexing and Abstracting: Ulrich's - Global Serials Directory Goods and Services Tax (GST): A New Tax Reform in Malaysia Nor Hafizah Abdul Mansor Faculty of Accountancy Universiti Teknologi MARA (UiTM), Malaysia Email: norha058@johor.uitm.edu.my Azleen Ilias College of Business and Accounting, Universiti Tenaga Nasional (UNITEN), Malaysia Email: Azleens@uniten.edu.my Abstract The Goods and Services Tax (GST) is becoming one of the most prominent topics in Malaysia. The announcement by the Malaysian Ministry of Finance (MOF) in the Budget 2010 on the implementation of GST had created various reactions from practitioners, academicians, general public and most important businesses. GST is one of the tools that are proposed by the Government to reduce continuous deficit budget in Malaysia. This paper discusses the GST as a new tax reform in Malaysia, and covers several issues in order to enhance the understanding and readiness among Malaysian in adopting GST. Keywords: Tax reform; GST; budget deficit. 1. Introduction The introduction of Goods and Services Tax (GST) was first announced in the Budget 2005 in order to replace the existing sales and services tax structure in Malaysia. This new tax reform is projected to be implemented in January 2007. However, the Government has announced on 22 February 2006 that the implementation would be postponed to a later date. Recently in Budget...
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...incidence of sin taxes 2.2 The incidence of tax on pure rent in a small open economy 2.3 Tax incidence in bargaining 2.4 The general equilibrium incidence of environmental taxes 2.5 The tax system incidence on unemployment: A country specific analysis for the OECD economies: 2.6 Tax and subsidy incidence equivalence theories: experimental evidence from competitive markets 2.7 Tax incidence under oligopoly: a comparison of policy approaches 2.8 The incidence of income tax on wages and labour supply 2.9 The incidence of personal income taxation: evidence from the tax reform act of 1986: 2.10 Tax incidence when individuals are time-inconsistent: the case of cigarette excise tax 3. Conclusion References 1. Introduction: Government generally collect taxes to generate revenue and question arise here is that after imposition of taxation, which group will bear the tax burden. After implementation of tax, there would be the division of tax burden between byres and sellers which is known as tax incidence. Tax incidence is linked to the price elasticity of demand and supply. If supply is more elastic than demand then the tax burden falls upon the buyers and when the demand is more elastic than supply then the producers will bear the cost of the tax. Tax incidence is basically the analysis of the effect of taxation on the distribution of economic welfare. Tax incidence expose that which group either consumer...
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...changes in the US and around the world affect the U.S. economy today. Even if the U.S. economy presently remains as one of the world’s largest economy, the country is now in deep recession and must The purpose of this paper is to understand the prevailing economic trends in the US particularly on unemployment, interest rates, and consumer income including the expectations of both the consumer and business sectors. This paper will also discuss the effect of these economic indicators on the aggregate supply and demand and the evaluation of current fiscal policies that were recommended by the government. This paper aims to let future business managers be aware of the importance of comprehending current US fiscal policies as it outlines the blueprint of change to the US economy. Current Economic Trends Unemployment is a term that you will hear often when spending time in any city in the United States. It is an issue that is spoken of from the dinner table to the oval office. The United States experienced its “worst downturn since the Great Depression” but continues to recover adding 176,000 jobs to the private sector in March-April 2013 and reducing unemployment to 7.5% (Bureau of Labor Statistics, 2013). President Barack Obama has introduced large plans to reform banking in America. The people of the U.S. expect to see banks become more regulated, they expect that home loans will be reasonable, they expect that the White House will follow through on their promises to ensure banks...
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...The purpose of this paper is to briefly describe the economic problem of tax reform in the United States of America. First, I will give a description of tax reform in the United States of America. Second, I will assess the impact the problem poses to society. Third, I will design an economic policy solution to the problem. Fourth, I will analyze the economic theory used to complete the policy solution and determine the impact on the appropriate stakeholders. Last, I will analyze how the economic policy proposed would solve the economic problem. Tax reform is the process of changing the way taxes are collected or managed by the government. Tax reformers have many different goals. Some seek to make the tax system more progressive or less progressive. Others want to simplify the tax system and make it more understandable or more accountable. In the United States, it is required for working citizens to pay taxes. Taxes are generated from an individual’s income or from sales. These taxes go towards the local, state, and federal government. The purpose of taxes is to fund the government, the military, and services to low-income families. Programs such as food stamps, housing, Social Security, public school, and healthcare are available due to taxes. The tax system is based on the “ability to pay.” As an individual’s income increases, so does their taxable income rate. The current economic situation of the United States can be blamed on a multitude of variables and is the fault of...
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... President Reagan’s main objective was to address different economic problems through tax cut, decreased nondefense spending, increased defense spending and balanced budget. His policies brought success in stimulating the economy. He was able to improve the lives of the people and certain concerns during those times such as recession, unemployment and inflation. In 1985, while efforts have been made by President Reagan to uplift the economy, the US government was still beset by unbalanced budget due to deficits. Thus in his second term, he focused more in addressing this problem. However, the economic policies he implemented appeared to have created a setback in the country’s budget. In addition to the existing deficits prior to his term, deficits continued to increase. Objectives This paper aims to give an analysis on the cause and effect of the deficit problem Reagan faced in his second term and an analysis of the strategies he implemented in solving it. This paper also offers alternative strategies that would allow Reagan to reduce the deficits and balanced the budget. Analysis The Causes of the Budget Deficits This paper discusses three major cause of the budget deficit during Reagan’s term – tax cut, military spending and recession. The administration’s policy for tax cut was implemented to break the postwar trends to help the people and make an economic turnaround. Tax is the major source of...
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...Services Tax (GST) in India: prospect for states by Mohd. Azam Khan1 and Nagma Shadab2 Department of Economics, Aligarh Muslim University, India Abstract: Goods and services tax (GST) is a broad based and a single comprehensive tax levied at every stage of the production and distribution chain with applicable set-off in respect of the tax remitted at previous stages. It is basically a tax on final consumption integrates the union excise duties, custom duties, services tax and state VAT. Presently around 140 countries have adopted the GST pattern, including India. The GST would be beneficial for the consumers as it reduces the final burden of taxation. For Government it leads the reduction of tax compliance efforts and administrative costs and for business units it leads transparency, complete set-off and removal of cascading effect of taxation. It is in this background that the present paper tries to explain the significance of GST in India and its prospects for states to generate revenue and ensure transparency in tax structure. This paper is organized into seven sections. Section two presents justification for dual structure of GST in India. The third part presents the rate structure under GST work in India. The fourth segment is concerned with the working of GST in India. The fifth part shows the international experiences of GST at state level in India. The seventh and final part is related to conclusion and policy recommendations. Keywords: Goods and service tax, budgetary...
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...Economic Reforms in Asia: The Indian Case Study The Asian economy has seen a rapid rise over the past decade with countries such as China, India and South Korea making major headways. China, being the leader of the group, has been largely tipped by many economists to overtake the US as the world’s superpower by 2025. Asian GDP Performance (1997-2005) Source: http://www.treasury.gov.au The success of these nations came on the back of major economic reforms which transformed these sleeping giants into what it is today. China went through a major economic reform in 1979 and soon thereafter success followed. India, followed the same path, but much later than China, and it was not until the turn on the 1990s that India went on the path of economic liberalisation. This paper will focus on the economic reforms that took place in India and its impact on the country in terms of trade and macroeconomics growth and the birth of new economy. A section of this paper will also be comparing the growth of India in comparison to its Chinese counterparts as well as discuss reasoning behind critics who believe liberalisation was not the main contributor to the growth India is achieving today. Pre-Reform Period Post independence, India saw the need to move from an agrarian economy to an industrial one and as such building its competency in crucial sectors of the economy was important. The role of government therefore included economic management...
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...Fair Tax Reform The current economic situation of the United States can be blamed on a multitude of variables and is the fault of numerous politicians from both parties as well as an abundance of special interest groups with lobbying power, not to mention several Presidential administrations. This paper will not examine all of these variables or individuals; it will concentrate on the isolated issue of tax reform on the highest earners and how it negatively affects the federal deficit and income inequality inside of the United States. What this paper will prove is that if the United States does not raise taxes on the highest earners, history shows that the divide between rich and poor as well as the divide between surplus and deficit will only widen into the future. When President Ronald Reagan shrank the tax brackets in 1987, it was the beginning of a new economic era. The theory behind cutting taxes on the richest people was that with extra money, the most profitable companies and taxpayers would invest their extra capital into the market and in the process create more jobs, expanding the economy. This may not have been the catalyst for the service economy revolution but it certainly coincided with it. A significant amount of opportunity cost was invested into foreign markets creating a cheaper workforce abroad, while domestically shrinking the labor market. According to MIT professor James Poterba, income inequality began to increase after the 1986 tax reform. According...
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...THE IDEAs WORKING PAPER SERIES Paper no. 01/2012 Fiscal Policy Evolution and Distributional Implications: The Indonesian experience Smitha Francis Abstract This paper analyses Indonesia’s resource mobilisation and public expenditure policies against the backdrop of her inequality trends and macroeconomic policy evolution. It is argued that the country’s fiscal policy stance has been adversely impacted by her monetary and financial sector policies under an open capital account, with attendant regressive distributional implications. Juxtaposing the analysis of revenue mobilisation trends and taxation policies with the evidence of increasing asset and land concentration and persisting high inequalities reveals that the increase in income tax revenue did not necessarily come from the upper income profiles or corporate profits. Meanwhile, although government expenditure to GDP ratio has improved after 2003, capital expenditures and social expenditures other than those in education continue to remain low. Further, the current pattern of fiscal decentralisation does not seem to be effective in addressing the existing disparities. JEL Classification H 200; H 500; H 700 Key Words Indonesia, fiscal policy, public finance, inequality, taxation, revenue, government expenditure, financial liberalisation, IMF debt conditionalities, decentralisation Smitha Francis is Principal Economist, Economic Research Foundation, New Delhi. Email for correspondence: smithafrancis@gmail.com ...
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...BOTSWANA AND THE WASHINGTON CONSENSUS HAVE THE RECOMMENDED POLICIES OF THE WASHIGNTON CONSENSUS BEEN IMPLEMENTED IN BOTSWANA? WHAT RES (Harvey C, 1996) (Botswana, 1966)ULTS HAVE BEEN ACHIEVED WHERE THE RECOMMENDED POLICIES HAVE BEEN IMPLEMENTED AND OR NON-IMPLEMENTED? INTRODUCTION The term “Washington Consensus” was the brain child of the English economist John Williamson. According to Williamson, the term referred to a set of ten specific economic policy prescriptions that he considered to represent the standard reform package promoted for developing countries, especially the Latin America by Washington based institutions such as the IMF and the World Bank. (Williamson, 2002). The policies prescribed encompassed: Fiscal discipline, redirection of public expenditure towards broad-based provision of key pro-growth, pro-poor services like primary education and primary health, tax reform, financial liberalization, a competitive exchange rate, trade liberalization, liberalization of inward foreign direct investment, privatization, deregulation and secure property rights. According to Williamson (1996), the phrase Washington Consensus has become a familiar term in development policy circles. The term has come to be used fairly widely in a second, broader sense, to refer to a synonym for what is often called market fundamentalism or neo-liberalism which refers to Laissez-faire Economics, that is , lets bash the state, the market will resolve everything. However, Williamson dispute...
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...various sectors championing sin tax reform as it sought to retain the multitiered system and increase excise tax collection from tobacco and alcohol products by only P15 billion to P20 billion in the first year of implementation. This is significantly lower than the P31.35 billion that House Bill 5727, already passed on third reading, projects to raise, and an even farther cry from the P60.63-billion goal originally proposed by the Department of Finance. Senator Drilon’s substitute bill features an expected excise tax collection of P40 billion to P45 billion in the first year. Congress will adjourn for the holidays in six weeks, and there will be just three weeks of sessions next year before our legislators switch to campaign mode for the 2013 elections. Moreover, the Senate is also scheduled to begin deliberations on the proposed 2013 General Appropriations Act by next week. Thus, the need for the Senate to act and move the sin tax bill forward gains even greater urgency. Certainly, the passage of the sin tax bill has the full backing of the Aquino administration, which plans to use the revenue from the revised sin tax system to advance the government’s universal health care agenda. The campaign has garnered strong public support as well, particularly from the medical and health community. Last May, the Makati Business Club submitted its position to the House ways and means committee on the pending sin tax bill. In its statement “Tax Reform for a Healthier and Competitive...
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...HD231-6231/2012 COURSE; BACHELOR OF COMMERCE UNIT; TAXATION UNIT CODE; HBC 2211 GROUP I ASSIGNMENT 1 TASK; Explain the fiscal policies reforms the government has undertaken over the years in respect to tax reforms In Kenya. Kenya’s tax system has undergone more or less continual reform over the last twenty years. On the policy side, rate schedules have been rationalized and simplified, a new value-added tax introduced, and external tariffs brought in line with those of neighboring countries in East Africa. At the same time, administrative and institutional reforms have taken place. Most notable among these was the creation of the semi-autonomous Kenya Revenue Authority (KRA) in 1995, which centralized the administration of tax collection. Kenya relied on unified tax policies and an administrative system jointly administered by the initial three members of the EAC. This was a legacy of British colonial administration that all the three countries inherited at independence. At that point, the government’s three main sources of tax revenue were: income tax; customs and excise duties; and inland revenue. Changes in both policies and administration were collaboratively determined and minimal until early 1970s. Following a decision to assign responsibility for income tax to each EAC member state, Kenya adopted the community legislation and enacted the Income Tax Act of 1973. The pragmatic post-independence political economy choices of the Government of Kenya worked quite impressively...
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...No. 2060 August 7, 2007 The Estonian Economic Miracle The Honorable Mart Laar Estonia is a small country in Northern Europe on the Baltic Sea, at the crossroads of East and West, South and North. Samuel Huntington states that the Estonian border is a border of Western civilization, a border where civilizations clash.1 This has made Estonia interesting to historians but hard for people who live there. Throughout history, Estonians have had to fight for their freedom. In 1918, Estonia declared independence. It was occupied by the Soviet Union in 1940 during the Second World War. We fought the communist terror during the war but were defeated. As a result of the occupation, Estonia lost nearly 20 percent of its population. But we never gave up. When the 1980s offered us a new chance, we took advantage of it. Estonia became one of the first countries to pry open the cracks in the Soviet Empire. Finally, in 1991, after 50 years of occupation, Estonia became free again. We had freedom but little else. Estonia was destroyed during the period of communist rule. In 1939, Estonia’s living standards and way of life were more or less the same as neighboring Finland’s. Then Estonia lost its independence, but Finland, despite losing territory and population, succeeded in keeping its independence. Life under two different political systems created a huge disparity in the development of Finland and Estonia. People learned and worked hard on both sides of the Finnish Bay, but only the Finns...
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