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This paper contains a proposal (referred to as the "modified reverse-charging" approach) to tax financial intermediation services under a VAT. At the heart of the proposal is the application of a reverse charge that shifts the collection of the VAT on deposit interest from depositors to banks, in conjunction with the establishment of a franking mechanism managed by banks that effectively transfers the VAT so collected to borrowers as credits against the VAT on their loan interest on a transaction-by-transaction basis. The proposal is fully compatible with an invoice-credit VAT and is capable of delivering the correct theoretical result at minimal administrative costs.

Value-added tax. --- Financial services industry. --- Services, Financial --- Service industries --- Added-value tax --- Goods and services tax --- GST (Goods and services tax) --- Tax on added value --- VAT (Value-added tax) --- Sales tax --- Banks and Banking --- Money and Monetary Policy --- Taxation --- Industries: Financial Services --- Business Taxes and Subsidies --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Financial Institutions and Services: Government Policy and Regulation --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- Financial Institutions and Services: General --- Public finance & taxation --- Finance --- Monetary economics --- Banking --- Value-added tax --- Financial services --- Loans --- Credit --- Taxes --- Financial institutions --- Money --- Financial sector --- Economic sectors --- Spendings tax --- Financial services industry --- Banks and banking --- New Zealand

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This paper explores the revenue-raising aspect of progressive taxation and derives, on the basis of a simple model, the optimal degree of tax progressivity where the tax revenue is used exclusively to finance (perfectly) targeted transfers to the poor. The paper shows that not only would it be optimal to finance the targeted transfers with progressive taxation, but that the optimal progressivity increases unambiguously with growing income inequality. This conclusion holds up under different assumptions about the efficiency cost of taxation and society’s aversion to inequality.

Macroeconomics --- Taxation --- Efficiency --- Optimal Taxation --- National Government Expenditures and Welfare Programs --- Aggregate Factor Income Distribution --- Personal Income, Wealth, and Their Distributions --- Taxation, Subsidies, and Revenue: General --- Public finance & taxation --- Income inequality --- Personal income --- Average effective tax rate --- Progressive taxation --- Marginal effective tax rate --- Income distribution --- Income --- Tax administration and procedure

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This paper reviews conceptual linkages between taxation and unemployment, available empirical evidence and country policies that may have a bearing on these linkages in the OECD and in a sample of developing and transitional economies, Fund policy advice on these issues, and tax policy options in addressing the unemployment problem. It concludes that the emphasis in policy should be placed on minimizing tax distortions, rather than on formulating activist tax policies to reduce unemployment.

Aggregate Human Capital --- Aggregate Labor Productivity --- Demand and Supply of Labor: General --- Economic theory --- Employment --- Fiscal Policy --- Income economics --- Income tax --- Intergenerational Income Distribution --- Labor economics --- Labor Economics: General --- Labor market --- Labor markets --- Labor taxes --- Labor --- Labour --- Macroeconomics --- Mobility, Unemployment, and Vacancies: Public Policy --- Personal Income and Other Nonbusiness Taxes and Subsidies --- Taxation --- Taxation, Subsidies, and Revenue: General --- Taxes --- Unemployment --- Unemployment: Models, Duration, Incidence, and Job Search --- Wages --- Wages, Compensation, and Labor Costs: Public Policy --- Welfare & benefit systems --- United States

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The present paper takes a fresh theoretical and empirical look into the relationship between Wagner’s law and economic development. It introduces human capital into a classic two-sector model of unbalanced growth. It shows that, as an economy develops, changes in the relative returns to human capital and unskilled labor, as a result of changes to their relative scarcities, could have a significant impact on the size of the government sector, depending in part also on the difference in relative factor intensities between outputs of the private and government sectors. This conjecture is broadly supported by empirical evidence based on a cross-section analysis of a large sample of developed and developing countries.

Civil service & public sector --- Economic sectors --- Expenditure --- Expenditures, Public --- Finance, Public --- Human Capital --- Human capital --- Income economics --- Income --- Industrial productivity --- Labor Productivity --- Labor --- Labour --- Macroeconomics --- Macroeconomics: Production --- National accounts --- National Government Expenditures and Related Policies: General --- Occupational Choice --- Personal income --- Personal Income, Wealth, and Their Distributions --- Production and Operations Management --- Production --- Productivity --- Public Enterprises --- Public finance & taxation --- Public Finance --- Public sector --- Public-Private Enterprises --- Skills --- Structure, Scope, and Performance of Government --- United States

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With the advent of the economic and monetary union in the European Union (EU), the economic landscape of the EU will bear a striking resemblance to that of the United States in terms of fundamental attributes such as the freedom of internal movements of individuals, capital, and goods within the union, as well as the adoption of a common currency. This paper examines developments in the tax systems of the states in the United States and draws lessons for the need of coordination of EU tax systems.

Macroeconomics --- Taxation --- Corporate Taxation --- Taxation, Subsidies, and Revenue: General --- State and Local Government --- Intergovernmental Relations: Interjurisdictional Differentials and Their Effects --- International Fiscal Issues --- International Public Goods --- Personal Income and Other Nonbusiness Taxes and Subsidies --- Business Taxes and Subsidies --- Personal Income, Wealth, and Their Distributions --- Public finance & taxation --- Corporate & business tax --- Income and capital gains taxes --- Subnational tax --- Income tax systems --- Corporate income tax --- Personal income --- Taxes --- National accounts --- Income tax --- Corporations --- Income --- United States