Revenue Mobilisation in Sub‐Saharan Africa: Challenges from Globalisation I – Trade Reform

This is the first of two articles evaluating the nature and extent of, and possible responses to, two of the central challenges that globalisation poses for revenue mobilisation in sub‐Saharan Africa: trade liberalisation, and corporate tax competition. Both articles use a new dataset with the features needed to address these issues meaningfully: a disentangling of tariff from commodity tax revenue, and a distinction between resource‐related and other revenues. This first article describes that dataset, and provides a broad picture of revenue developments in the region between 1980 and 2005. Countries’ experiences have varied, but the overall picture is of non‐resource revenues having been essentially stagnant. Within this, however, and with exceptions, reductions in trade tax revenue have been largely offset by increased revenue from domestic sources.     

International Tax Competition: A Case for International Cooperation in Globalization

The liberalization of international financial flows and foreign direct investment has induced countries to use diverse measures to attract inflow of foreign capital and foreign direct investment, which is expected to have a positive effect on the growth of GDP and thus a positive effect on social welfare. Tax exemption, reduction of tax rate, tax holiday, or diverse subsidies are some of the most important measures used. In this paper we study international tax cooperation, i.e., countries change and especially reduce tax rate for corporate income or for asset revenues to attract inflow of foreign direct investment. Both theoretical and empirical studies have shown the sensibility of foreign direct investment decision with respect to tax rate differences between home countries and host countries. In general, more inflow of foreign direct investment can be expected if the tax rate of the home country is lower than that of foreign countries. This is the main reason for international tax cooperation. In this paper we propose a simple model to prove the sub-optimal Nash non cooperative solution in a two-country tax-competition game. The model shows that international tax cooperation can improve welfare of the participating countries. How to reach a cooperative solution for an international tax competition game (ITCG) is therefore an important issue for further discussions and studies. International institutions can play a crucial role to reach international tax cooperation or international tax harmonization.     

AN ANALYSIS OF THE LAFFER CURVE

The Laffer curve shows the relationship between tax revenue and the personal income tax rate, with tax revenue being a presumably concave function of the tax rate and equal to zero at tax rates of zero percent and 100 percent. If the personal income tax rate is reduced, then tax revenue will decrease (increase) if the economy is on the positively (negatively) sloped section of the Laffer curve. This paper derives a sufficient condition for the economy to be on the positively sloped section of the Laffer curve. In light of the current knowledge of the elasticities of supply of labor and supply of saving, it is difficult to escape the conclusion that a decrease in U.S. personal income tax rates will decrease tax revenue.     

Informal sector taxes and equity: Evidence from presumptive taxation in Zimbabwe

Using a mixed‐methods approach, this article evaluates the equity implications of Zimbabwe's presumptive tax system, introduced in 2005 to raise revenue from the country's growing informal sector. The representative taxpayer method, which compares the hypothetical tax burdens of formal and informal sector taxpayers at varying income levels, shows that the presumptive tax regime undermines both vertical and horizontal equity. In addition, interviews with key informants from the tax authorities, other relevant organizations and informal sector operators were conducted to probe issues around collection, compliance and perceptions of fairness. The qualitative data suggest that weak enforcement, with more visible informal activities bearing the brunt of the tax burden, and selective (and sometimes politically motivated) application of the legislation, compromise equity further.     

Inequality and education decisions in developing countries

In this paper we analyze the effect of inequality on school enrollment, preferred tax rate and expenditure per student in developing countries; when parents can choose between child labor, public schooling or private schooling. We present a model in which parents make schooling decisions for their children, weighing the utility benefit of having a child with formal public or private education versus the forgone income from child labor or household work. Parents vote over the preferred tax rate to finance freely provided public education. The utility benefit of an educated child is proportional to expenditure per student, so that there is congestion in public school. We find that when parents can send their children to work or to private school, high inequality leads to exit from public education at both ends of the income distribution. Thus high inequality reduces the support for public education, leading to a low tax rate and expenditure per student. Exit from public education results in both high child labor and a large fraction of students attending private school. In fact there is a threshold level of inequality above which there is no longer support for public education. In addition we explore the implications for the design of foreign aid. The results suggest that foreign aid policies should focus on promoting school attendance rather than increasing school resources, as the later policy might be offset by a reduction in the recipient country’s fiscal effort, with little impact on outcomes.      

Casino Taxation in Macao: An Economic Perspective

Macao’s gaming industry has experienced dramatic growth for 8 years, yet with certain social costs due to compulsive gambling. The government has come under pressure for tax cuts even though its gaming receipts are falling relatively to the casino retained revenue. The request for tax relief is triggered by a recent decline in net profit despite fast growing gross gaming revenue under favorable market conditions. This is very likely caused by a substantial hike in casino operating costs due to increased competition and might also signal the presence of the principal-agent problem. Given the regressivity of gaming tax with respect to net profit, it is no surprise that casinos with lower profitability are more prone to seek tax cuts. The source of Macao gaming profit hinges on three distinct factors: rising demand from China, monopoly location for casinos, and market structure of oligopoly. These factors provide economic justifications for the current tax regime of Macao with a strong ability to pass tax burdens on to massive visitors. The government relies on casino tax revenue to deal with gambling related problems and promote local diversified development. Pushing for tax variability may create policy instability, business uncertainty, and unpredictable prosperity in the long term.     

Security Sector Reform and Development Assistance: Explaining the Diffusion of Policy Priorities among Donor Agencies

This paper employs a world society theoretical framework to examine the recent trend among foreign aid donors to focus on security sector reform as an aid priority. Through a comparative qualitative case study based on interview data collected from aid officials and development workers in Canada, Sweden, and the United States (n = 41) in 2006–2007, this paper finds that the extent to which the security sector reform agenda is integrated into donor policy and programs is mediated by catalytic policy processes linked to intergovernmental organizations and the degree of donor agency autonomy from the rest of government. These findings are used to illustrate how common processes of globalization in world society shape similar approaches to foreign aid among donor agencies despite disparate domestic contexts. These processes lead to convergence of donor policy around security issues and at the same time can account for decoupling of practice from world society policy models.     

DEMAND FOR NATIONAL PUBLIC GOODS: ESTIMATES FROM SURVEYS

This paper presents an empirical method of estimating aggregate demand functions for national public goods. The technique combines survey responses and tax incidence figures in a probit model. The model provides estimates of average willingness-to-pay for federal government services and simultaneously regresses these estimates on socioeconomic characteristics, thus obtaining estimates of the demand function. The main findings are that demand for defense, space, foreign aid, welfare, education and aid to cities is a concave function of income, a negative function of expenditure level (generally) and dependent upon such characteristics as race, age, education level, and sex.     

Targeting occupations with varying reputations to increase tax revenue

If the government's goal is to raise tax revenue in a cost-effective manner, which (if any) occupation categories could be targeted with a higher probability of an audit to yield increased revenue? Looking beyond mere opportunity to evade (e.g., self-employment) and starting from the premise that taxpayers in certain occupations evade more than others, the issue is whether these taxpayers respond to a change in the audit rate. Theory suggests that compliance increases in response to higher audit rates; the occupations with the higher evaders could therefore be targeted. This theory is tested by drawing a connection between occupation, reputation, and tax compliance. We assume that taxpayers in occupations with high need for reputation respond to a lower extent to increased tax audits than taxpayers whose achievement does not depend on reputation. The results support the effectiveness of raising tax revenue by targeting specific occupations, non-managers, with a higher probability of an audit.     

From Monterrey to Doha: Taxation and Financing for Development

Ill‐conceived tax policies cost developing countries vast sums of public revenue, but this issue has received relatively little attention within the Financing for Development (FfD) process of the United Nations. The outcome documents of the FfD conferences in Monterrey (2002) and Doha (2008) largely neglect globalisation‐related tax issues such as under‐taxation of multinationals and capital flight to tax havens. This article analyses how this topic has been marginalised by powerful interests, ideas and institutional factors, but it also shows how a growing coalition of governments, international organisations and NGOs has recently succeeded in raising the issue much higher up the international agenda.     

THE CULTURE OF CORRUPTION,TAX EVASION,AND ECONOMIC GROWTH

This study uses a dynamic general equilibrium model to quantify the effects of corruption and tax evasion on fiscal policy and economic growth. The model is calibrated to match estimates of tax evasion in developing countries. The calibrated model is able to generate reasonable predictions for net tax rates, the corruption associated with public investment projects, and the negative correlation between corruption and tax revenue. The presence of corruption and evasion is shown to have significant, but not large, negative effects on economic growth. The relatively moderate effects help explain the absence of a robust negative correlation between growth and corruption in cross‐country data. The model also implies that cracking down on tax evasion before addressing corruption can be a bad idea and that higher wages for public officials can improve welfare. (JEL H3, O4)     

A measuring instrument to evaluate e-service quality in a revenue authority setting

Tax revenue forms the backbone of any economy. The quality of the e-services provided by a revenue authority is therefore crucial, as e-service quality directly influences the burden of complying with tax obligations, and hence affects the tax compliance climate in a country. The aim of the study is the development of a measuring instrument that encapsulates the ‘lens of a tax practitioner’ in an e-service revenue authority setting. In order to develop a conceptual framework, an in-depth, qualitative approach was used to identify a comprehensive range of service attributes and dimensions that potentially drive e-service quality in the revenue authority setting. This framework is then compared with other relevant service quality models to derive at a proposed e-service quality-measuring instrument. Findings from this study may advance the understanding and the management of the e-service quality of the e-services in a revenue authority setting.     

上海房产税改革的优化路径选择

上海房产税改革试点运行3年有余,取得了先行先试的改革示范效应,但房产税在财政收入筹集和房地产市场调节上发挥的作用并不显著,其原因主要在于房产税税制要素设计不尽合理、房产税功能定位有偏差.进一步改革的优化路径是：完善税收结构,合理税负分布,稳定和优化房地产宏观税负;合理设计房产税税制要素,实现房产税向存量房逐步过渡;清理不合理的行政事业性收费,设立配套税,打包征收;逐步把房产税培育为地方主体税种,以降低财政对土地出让金的依赖.通过以上改革,实现房地产税收体系的整合和房地产税制的重塑,为我国房地产市场稳健运行建立税收制度基础.     

The Adoption and Use of the Hirschman–Herfindahl Index in Nonprofit Research: Does Revenue Diversification Measurement Matter?

Since its introduction by Tuckman and Chang (Nonprofit Volunt Sector Q 20(4):445–460, 1991), the Hirschman–Herfindahl Index (HHI) has been widely adopted into the nonprofit literature as a precise measure of revenue concentration. This widespread adoption has been characterized by diverse composition, with the HHI’s calculation being largely determined by the nature of the available data and the degree to which it contained disaggregated measures of revenue. Using the NCCS 990 Digitized Data, we perform an acid test on whether different HHI measures yield significantly different results. Four measures of revenue concentration—an aggregated measure based on three revenue streams, an aggregated measure separating government grants from other contributions, a more nuanced measure based on seven revenue streams, and a fully disaggregated measure based on thirteen revenue streams—are used to predict two dominant nonprofit financial health dimensions: financial volatility and financial capacity. Overall, our results show that aggregation in HHI measurement matters; aggregation often downplays relationships by influencing the significance levels and magnitudes of estimates in a non-trivial way.     

Defining the Scope of Aid Reduction and Its Challenges for Civil Society Organizations: Laying the Foundation for New Theory

Much of the literature on local civil society organizations and foreign aid focuses on the short-term consequences of funding cycles and contract conditions, but treats foreign aid at the macrolevel like a largely stable condition, as though countries receiving foreign aid will continue to do so for the foreseeable future. Empirical evidence of aid reduction, however, suggests that this approach neglects long-term phenomena. This article examines aid patterns on a global scale and explores their potential consequences for civil society organizations. Working from World Bank data, we identify general patterns in country-level aid reduction. We examine the frequency of country-level aid reduction, the magnitude of reduction, its duration, and whether aid reduction tends to be rapid or gradual. Mapping these patterns establishes that country-level reductions in aid are a regularly occurring, global phenomenon. Moreover, even as global ODA levels increase, instances of country-level aid reduction are also increasing. Our findings lay the foundation for building new, generalizable theory about aid reduction and allow us to identify pressing questions about the consequences for civil society organizations in need of further research.     

Risk and diversification of nonprofit revenue portfolios: Applying modern portfolio theory to nonprofit revenue management

This study uses modern portfolio theory (MPT) to estimate the risk of nonprofit revenue portfolios and examines to what degree the revenue concentration measure based on Herfindahl–Hirschman Index is associated with the portfolio risk measure based on MPT. The findings suggest that nonprofits with greater revenue concentration have lower revenue portfolio risk in the whole sample analysis. However, it is plausible that this result is dominated by organizations reliant on commercial income, which comprise over half of the sample. In fact, when examined separately, the relationship varies by an organization's primary funding structure. While higher revenue concentration is positively associated with portfolio risk for organizations relying on donations or those without a consistent primary funding source, it appears to associate with a lower portfolio risk for commercial organizations and those relying on government grants. This study reflects on the concept of diversification derived from portfolio theory and calls attention to a more nuanced approach to nonprofit revenue strategy.     

Scale shift in international tax justice: comparing the UK and Australia from 2008 to 2016

ABSTRACT

International tax justice issues, such as corporate tax avoidance, have gained particular salience over the past decade in an environment of financial instability and government austerity. Civil society involvement has ranged from trade unions and NGOs calling for parliamentary inquiries to civil disobedience by less established actors. Since the international financial crisis, how have levels of contentious collective action around these issues waxed and waned? Is contentiousness associated most with domestic politics or global media events like the Panama Papers? This paper uses an original hand-coded dataset from five national newspapers in the United Kingdom and Australia between 2008 and 2016. Political claims analysis (PCA) was used to collect all instances of claims around international tax justice and compare the types of actions and the different frames used by civil society actors. In both countries, mobilising grievances are generated most strongly in the period after domestic austerity policies are introduced. The qualitative coding provides evidence of accompanying frame alignment in these periods, as international taxation is problematized in terms of national revenue, demonstrating scale shift from the global to the national political stage.     

Tax-based research and data on non-profit organisations

Tax-exempt, non-profit organisations represent a significant and growing sector within the US economy. Between 1975 and 1990, assets of tax-exempt organisations increased in real terms by over 150 per cent while the revenue increased by over 227 per cent. This compares to a growth in real GDP of 52 per cent over the same period. A variety of tax policy issues on tax-exempt organisations and the non-profit sector can be addressed using several sources of data collected by the IRS from federal information and tax returns of exempt organisations. The Statistics of Income (SOI) Division, using sample data, conducts studies of many of the different components of the tax-exempt sector, including non-profit charitable organisations, organisations exempt under sections 501(c)(4)-(c)(9), private foundations and 4947(a) charitable trusts, and the unrelated business income of tax-exempt organisations. Income statement, balance sheet and other financial data, as well as a great amount of non-financial information, are collected in these SOI studies. The primary purposes of this article are: first, to document the role of the non-profit sector in the US economy and the evolving growth and change within the sector from the mid-1970s through to the present; and, second, to describe the ongoing SOI studies of tax-exempt organisations, the products and services available through SOI, and the future statistical plans at SOI for data collection and analysis of tax-exempt organisations and the non-profit sector.     

Willingness to pay tax: The Laffer curve revisited for 12 OECD countries

According to Laffer, economic activities are a decreasing function of the taxation rate. As a consequence, total tax revenue increases with the taxation rate at its lower levels and decreases against it at its higher levels. The result is the Laffer curve. According to him, the reason for this decrease lies in decreasing economic activities. Although this may be true for activities in the official (white) sector, in the unofficial (black) sector they can increase under the influence of an increasing taxation rate. Part of the Laffer effect may be nothing more than an activity switch away from the white towards the (hidden) black sector. This paper takes both effects into account: decreasing activities in the white sector combined with increasing activities in the black sector. It examines the computation of the maximum tax revenue generating taxation rate for a number of OECD countries. It concludes that, with the exception of Sweden, the marginal taxation rate in these countries is below its optimum.     

ON THE DESIRABILITY OF TAX COORDINATION WHEN COUNTRIES COMPETE IN TAXES AND INFRASTRUCTURE

This article contains two distinct messages. First, when jurisdictions compete in two independent strategic variables, the decision to coordinate on one variable (a tax rate) induces a carry‐over effect on the unconstrained instrument (infrastructure expenditures). Consequently, classical results of the tax coordination literature may be qualified. A second message is that the relative flexibility of the strategic instruments, which may depend on the time horizon of the decision making, does matter. In particular, tax coordination is more likely to be detrimental (in terms of revenue and/or welfare) when countries can compete simultaneously in taxes and infrastructure, rather than sequentially. The reason is that simultaneity eliminates strategic effects between tax and nontax instruments. (JEL H21, H87, H73, F21, C72)