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This paper estimates the pass through of VAT changes to consumer prices, using a unique dataset providing disaggregated, monthly data on prices and VAT rates for 17 Eurozone countries over 1999-2013. Pass through is much less than full on average, and differs markedly across types of VAT change. For changes in the standard rate, for instance, final pass through is about 100 percent; for reduced rates it is significantly less, at around 30 percent; and for reclassifications it is essentially zero. We also find: differing dynamics of pass through for durables and non-durables; no significant difference in pass through between rate increases and decreases; signs of non-monotonicity in the relationship between pass through and the breadth of the consumption base affected; and indications of significant anticipation effects together with some evidence of lagged effects in the two years around reform. The results are robust against endogeneity and attenuation bias.

Value-added tax --- Exchange rate pass-through --- Foreign exchange rate pass-through --- Pass-through of exchange rates --- Prices --- Added-value tax --- Goods and services tax --- GST (Goods and services tax) --- Tax on added value --- VAT (Value-added tax) --- Sales tax --- Labor --- Macroeconomics --- Taxation --- Price Level --- Inflation --- Deflation --- Taxation and Subsidies: Incidence --- Business Taxes and Subsidies --- Macroeconomics: Consumption --- Saving --- Wealth --- Unemployment: Models, Duration, Incidence, and Job Search --- Public finance & taxation --- Labour --- income economics --- Consumption --- Consumer prices --- Unemployment rate --- Consumption taxes --- Taxes --- National accounts --- Spendings tax --- Economics --- Unemployment --- Germany --- Income economics

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Personal Income Tax (PIT) is one of the key sources of revenues in Advanced Economies (AEs) but plays a much more limited role in Low-Income Developing Countries (LIDCs) and Emerging Market Economies (EMEs), both in terms of revenue and redistributive impact. Notwithstanding, this paper shows that LIDCs and EMEs increased their PIT-to-GDP revenue by 110 and 48 percent, respectively, during the 1990-2019 period, a marked improvement in the PIT revenue performance. We find that this rise was driven primarily by economic developments and to a lesser extent by changes in the design of PIT systems. We also find that LIDCs that improved their tax-to-GDP ratios relied on a broader set of tax instruments and not exclusively on the PIT, suggesting that a successful revenue mobilization strategy of developing countries requires a comprehensive approach covering a wider range of taxes. Finally, using a newly assembled dataset of PIT characteristics of 157 countries over the 2006-2018 period, we estimate a novel redistribution index of the PIT in LIDCs. We show that the contribution of the PIT to inequality reductions has been significant.

United States --- Macroeconomics --- Economics: General --- Personal Finance -Taxation --- Public Finance --- Taxation --- Corporate Taxation --- Personal Income and Other Nonbusiness Taxes and Subsidies --- Equity, Justice, Inequality, and Other Normative Criteria and Measurement --- Taxation, Subsidies, and Revenue: General --- Business Taxes and Subsidies --- Economic & financial crises & disasters --- Economics of specific sectors --- Public finance & taxation --- Corporate & business tax --- Personal income tax --- Taxes --- Revenue administration --- Income tax systems --- Corporate income tax --- Income and capital gains taxes --- Currency crises --- Informal sector --- Economics --- Income tax --- Revenue --- Corporations

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Governments use tax expenditures (TEs) to provide financial support or benefits to taxpayers. The budgetary impact of TEs can be similar to that of direct outlays: after the support is provided, less money is available to fund other government priorities. Systematic evaluations are needed to guide informed decision-making and to avoid a situation where the narrative on the benefits of TEs is primarily driven by profiting stakeholders. By TE “evaluation,” this note refers to a process that seeks to systematically inform policymakers on the desirability of introducing or maintaining specific tax benefits by gathering and analyzing available quantitative and qualitative information on their effects. Evaluation processes can be tailored to different levels of data availability and analytical capacity. An evaluation should focus on the policy objective of a TE and whether it effectively and efficiently contributes to that policy objective. Although important lessons can be learned from country practices in implementing increasingly ambitious evaluation processes, there is no single best-practice approach to replicate.

Tax expenditures. --- Tax deductions. --- Budget --- Budgeting & financial management --- Budgeting --- Business Taxes and Subsidies --- Economics: General --- Efficiency --- Expenditure --- Expenditures, Public --- Macroeconomics --- National Government Expenditures and Related Policies: General --- Optimal Taxation --- Public finance & taxation --- Public Finance --- Public financial management (PFM) --- Revenue administration --- Spendings tax --- Tax administration and procedure --- Tax auditing --- Tax Evasion and Avoidance --- Tax incentives --- Tax policy --- Taxation --- Taxation, Subsidies, and Revenue: General --- Taxation, Subsidies, and Revenues: Other Sources of Revenue --- Taxes --- Congo, Democratic Republic of the

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This paper reexamines the relationship between aid and domestic tax revenues using a more recent and comprehensive dataset covering 118 countries for the period 1980 - 2009. Overall, our results support earlier findings of a negative association between net Official Development Assistance (ODA) and domestic tax revenues, but this relationship appears to have weakened in reflection of greater efforts at mobilizing domestic revenues in many countries. The composition of net ODA matters: ODA grants are associated with lower revenues, while ODA loans are not. The paper further finds that net ODA and grants are negatively associated with VAT, excise and income tax revenues, but have a positive relationship with trade taxes. Aid has a particularly strong negative effect on domestic tax revenues in low-income countries and in countries with relatively weak institutions.

Economic assistance --- Loans, Foreign --- Revenue --- Government revenue --- Public revenue --- Finance, Public --- Taxation --- Effect of economic assistance on --- Econometrics --- Public Finance --- Industries: Financial Services --- Foreign Aid --- Taxation, Subsidies, and Revenues: Other Sources of Revenue --- Taxation, Subsidies, and Revenue: General --- Estimation --- Trade Policy --- International Trade Organizations --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Business Taxes and Subsidies --- Public finance & taxation --- Econometrics & economic statistics --- Finance --- Revenue administration --- Estimation techniques --- Taxes on trade --- Loans --- Value-added tax --- Econometric models --- Spendings tax

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Some countries support smaller firms through tax incentives in an effort to stimulate job creation and startups, or alleviate specific distortions, such as financial constraints or high regulatory or tax compliance costs. In addition to fiscal costs, tax incentives that discriminate by firm size without specifically targeting R&D investment can create disincentives for firms to invest and grow, negatively affecting firm productivity and growth. This paper analyzes the relationship between size-related corporate income tax incentives and firm productivity and growth, controlling for other policy and firm-level factors, including product market regulation, financial constraints and innovation. Using firm level data from four European economies over 2001–13, we find evidence that size-related tax incentives that do not specifically target R&D investment can weigh on firm productivity and growth. These results suggest that when designing size-based tax incentives, it is important to address their potential disincentive effects, including by making them temporary and targeting young and innovative firms, and R&D investment explicitly.

Taxation --- Corporate Taxation --- Production and Operations Management --- Business Taxes and Subsidies --- Firm Performance: Size, Diversification, and Scope --- Economywide Country Studies: Europe --- 'Panel Data Models --- Spatio-temporal Models' --- Taxation, Subsidies, and Revenue: General --- Production --- Cost --- Capital and Total Factor Productivity --- Capacity --- Macroeconomics: Production --- Public finance & taxation --- Macroeconomics --- Corporate & business tax --- Tax incentives --- Total factor productivity --- Productivity --- Corporate income tax --- Marginal effective tax rate --- Taxes --- Tax policy --- Industrial productivity --- Corporations --- Tax administration and procedure --- United Kingdom --- Panel Data Models --- Spatio-temporal Models