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The structure of Japan's corporate income tax system is broadly in line with those of other G7 countries. However, relatively high marginal and average effective tax rates prompt the question of whether adjustments should be considered to meet the objectives of promoting growth, investment and competitiveness in a revenue neutral manner. This paper discusses key issues and trade-off's related to changes in the corporate income tax system. It does not provide recommendations, but raises issues that could hopefully serve as useful inputs to the ongoing discussion and tax debate in Japan.

Corporations --- Taxation --- Investments: General --- Public Finance --- Corporate Taxation --- Business Taxes and Subsidies --- Taxation, Subsidies, and Revenue: General --- Investment --- Capital --- Intangible Capital --- Capacity --- Corporate & business tax --- Public finance & taxation --- Macroeconomics --- Corporate income tax --- Corporate taxes --- Average effective tax rate --- Depreciation --- Revenue administration --- Taxes --- Marginal effective tax rate --- Tax policy --- National accounts --- Tax administration and procedure --- Saving and investment --- Revenue --- Income tax --- Japan

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This paper extends the effective average tax rate (EATR) developed in Devereux and Griffith (2003) by relaxing the assumption of a one-period perturbation in the capital stock. Instead it allows a permanent investment. While this may appear a small change, it has important implications. First, it allows the EATR to be calculated in the presence of tax holidays, which are an important part of tax systems, especially in developing countries. Second, it reveals an interesting feature of the original EATR: despite the assumption of a one-period investment, the original measure is informative about long-term investments, thanks to the assumption of pooled depreciation. Without this assumption-which is justifiable in a few countries only- the EATR based on one-period perturbation in the capital stock would be less useful for analyzing medium and long-term investments.

Investments --- Taxation --- Tax rates --- Tax tables --- Investing --- Investment management --- Portfolio --- Finance --- Disinvestment --- Loans --- Saving and investment --- Speculation --- Econometric models. --- Rates and tables. --- Investments: General --- Taxation, Subsidies, and Revenue: General --- Investment --- Capital --- Intangible Capital --- Capacity --- Public finance & taxation --- Macroeconomics --- Depreciation --- Effective tax rate --- Tax holidays --- Average effective tax rate --- Marginal effective tax rate --- Tax administration and procedure --- Tax incentives --- Canada

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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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In April 1990, the U.K. Government implemented the largest change to local authority finance in England and Wales since the postwar period. It involves the introduction of a poll tax on domestic residents, the centralization of local business taxes, and an overhaul of Central Government grants. This paper analyzes the effect of these reforms on local government and the wider economy.

Expenditure --- Expenditures, Public --- Housing prices --- Housing Supply and Markets --- Housing --- Income --- Macroeconomics --- Marginal effective tax rate --- National accounts --- National Government Expenditures and Related Policies: General --- Personal income --- Personal Income, Wealth, and Their Distributions --- Prices --- Property & real estate --- Public expenditure review --- Public finance & taxation --- Public Finance --- Real Estate --- Tax administration and procedure --- Tax policy --- Taxation --- Taxation, Subsidies, and Revenue: General --- United Kingdom

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This Selected Issues paper conducts a comparative analysis of the main determinants of GDP per capita growth in New Zealand and in other OECD countries to assess the relative importance of macroeconomic factors, institutional settings, and geographical location in New Zealand’s growth performance during the last 30 years. The estimation results find strong support for the view that geographical isolation has significantly hampered growth in New Zealand. The paper also reviews the international experience with prefunding public defined-benefit pension schemes, with a focus on recent reforms in industrial countries—Canada, Ireland, Norway, and Sweden.

Foreign Exchange --- Inflation --- Labor --- Public Finance --- Taxation --- Nonwage Labor Costs and Benefits --- Private Pensions --- Social Security and Public Pensions --- Fiscal Policy --- Price Level --- Deflation --- Taxation, Subsidies, and Revenue: General --- Macroeconomics --- Pensions --- Public finance & taxation --- Currency --- Foreign exchange --- Banking --- Pension spending --- Fiscal policy --- Marginal effective tax rate --- Expenditure --- Prices --- Tax policy --- Tax administration and procedure --- New Zealand