IDEAS home Printed from https://ideas.repec.org/a/aiy/jnjaer/v19y2020i1p19-39.html
   My bibliography  Save this article

Methods for Assessing the Fiscal Effectiveness of Indirect Taxation

Author

Listed:
  • E. V. Balatsky
  • N. A. Ekimova

Abstract

The purpose of the article is to systematize different approaches to the assessment of the fiscal effectiveness of taxation in general and indirect taxation in particular. The article also seeks to elaborate proposals as to which methods are applicable to which analytical tasks. Comparative analysis of the existing practice of evaluating tax systems is used in the report. The results of the study are four types of fiscal effectiveness which were identified by the authors. The first type – budget effectiveness of indirect taxation – characterizes the ability of a tax to provide revenue to the budget. The second one – main effectiveness of indirect taxation – implies measuring the degree of the implementation of the main principle, according to which the trajectory of fiscal charges over time for a effectively working tax system must pass next to the main route, the role of which is played by the GDP trajectory. The third method – marginal effectiveness of taxation – is based on the construction of the production and institutional function and on the identification (based on this function) of the maximum tax burden for business (production) and the state (budget), when exceeding these limits leads to a drop in GDP and budget revenues respectively. The fourth one – institutional effectiveness of taxation – is based on the construction of the production and institutional function and the corresponding equation of distortion of equilibrium prices of macrofactors, which allows one to estimate the validity of the established tax burden from the point of view of the state's implementation of its obligations on formation and maintenance of effective institutions. The main conclusion of the article points to the necessity of a comprehensive assessment of tax systems using all four methods; otherwise one-sided and incomplete results would be turned out. The suggested methodological recommendations can be used for diagnostic and analytical purposes by governing bodies and research teams.

Suggested Citation

  • E. V. Balatsky & N. A. Ekimova, 2020. "Methods for Assessing the Fiscal Effectiveness of Indirect Taxation," Journal of Applied Economic Research, Graduate School of Economics and Management, Ural Federal University, vol. 19(1), pages 19-39.
    • Handle: RePEc:aiy:jnjaer:v:19:y:2020:i:1:p:19-39
    DOI: http://dx.doi.org/10.15826/vestnik.2020.19.1.002
    as

    Download full text from publisher

    File URL: https://journalaer.ru//fileadmin/user_upload/site_15934/2020/02_Balackii_Ekimova.pdf
    Download Restriction: no
    File URL: https://libkey.io/http://dx.doi.org/10.15826/vestnik.2020.19.1.002?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Karel Mertens & Morten O. Ravn, 2013. "The Dynamic Effects of Personal and Corporate Income Tax Changes in the United States," American Economic Review, American Economic Association, vol. 103(4), pages 1212-1247, June.
    2. Evgeny V. Balatsky & Natalya A. Ekimova, 2019. "The Impact of Tax Reforms on the Behaviour of Economic Agents (Indirect Taxation in Russia and the USA)," Journal of Tax Reform, Graduate School of Economics and Management, Ural Federal University, vol. 5(2), pages 129-147.
    3. Stoyan Tanchev, 2016. "The Role of The Proportional Income Tax on Economic Growth of Bulgaria," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 4, pages 66-77.
    4. Jens Matthias Arnold, 2008. "Do Tax Structures Affect Aggregate Economic Growth?: Empirical Evidence from a Panel of OECD Countries," OECD Economics Department Working Papers 643, OECD Publishing.
    5. Norman Gemmell & Richard Kneller & Ismael Sanz, 2011. "The Timing and Persistence of Fiscal Policy Impacts on Growth: Evidence from OECD Countries," Economic Journal, Royal Economic Society, vol. 121(550), pages 33-58, February.
    6. J. F. Li & Z. X. Lin, 2015. "The impact of sales tax on economic growth in the United States: an ARDL bounds testing approach," Applied Economics Letters, Taylor & Francis Journals, vol. 22(15), pages 1262-1266, October.
    7. Easterly, William & Rebelo, Sergio, 1993. "Fiscal policy and economic growth: An empirical investigation," Journal of Monetary Economics, Elsevier, vol. 32(3), pages 417-458, December.
    8. Kneller, Richard & Bleaney, Michael F. & Gemmell, Norman, 1999. "Fiscal policy and growth: evidence from OECD countries," Journal of Public Economics, Elsevier, vol. 74(2), pages 171-190, November.
    9. Desislava Stoilova, 2017. "Tax structure and economic growth: Evidence from the European Union," Contaduría y Administración, Accounting and Management, vol. 62(3), pages 1041-1057, Julio-Sep.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Dean Scrimgeour, 2015. "Dynamic Scoring in a Romer‐Style Economy," Southern Economic Journal, John Wiley & Sons, vol. 81(3), pages 697-723, January.
    2. Alban Elshani & Leke Pula, 2023. "Impact of Taxes on Economic Growth: An Empirical Study in the Eurozone," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 2, pages 24-41.
    3. Narciz Balasoiu & Iulian Chifu & Marian Oancea, 2023. "Impact of Direct Taxation on Economic Growth: Empirical Evidence Based on Panel Data Regression Analysis at the Level of Eu Countries," Sustainability, MDPI, vol. 15(9), pages 1-32, April.
    4. Dean Scrimgeour, 2015. "Dynamic Scoring in a Romer-Style Economy," Southern Economic Journal, Southern Economic Association, vol. 81(3), pages 697-723, January.
    5. Emilian DOBRESCU, 2016. "Controversies over the Size of the Public Budget," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(4), pages 5-34, December.
    6. repec:wly:soecon:v:81:3:y:2015:p:697-723 is not listed on IDEAS
    7. Desislava Stoilova, 2017. "Tax structure and economic growth: Evidence from the European Union," Contaduría y Administración, Accounting and Management, vol. 62(3), pages 1041-1057, Julio-Sep.
    8. Hans Pitlik & Margit Schratzenstaller-Altzinger, 2011. "Growth Implications of Structure and Size of Public Sectors," WIFO Working Papers 404, WIFO.
    9. Ferraro, Domenico & Ghazi, Soroush & Peretto, Pietro F., 2020. "Implications of tax policy for innovation and aggregate productivity growth," European Economic Review, Elsevier, vol. 130(C).
    10. Mura Petru-Ovidiu, 2015. "Tax Composition And Economic Growth. A Panel-Model Approach For Eastern Europe," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 1, pages 89-101, February.
    11. Jing Xing, 2011. "Does tax structure affect economic growth? Empirical evidence from OECD countries," Working Papers 1120, Oxford University Centre for Business Taxation.
    12. Canavire-Bacarreza, Gustavo & Martínez-Vázquez, Jorge & Vulovic, Violeta, 2013. "Taxation and Economic Growth in Latin America," IDB Publications (Working Papers) 4583, Inter-American Development Bank.
    13. Alfò, Marco & Carbonari, Lorenzo & Trovato, Giovanni, 2023. "On the effects of taxation on growth: an empirical assessment," Macroeconomic Dynamics, Cambridge University Press, vol. 27(5), pages 1289-1318, July.
    14. Norman Gemmell & Joey Au, 2013. "Government size, fiscal policy and the level and growth of output: a review of recent evidence," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 18(2), pages 203-229.
    15. Åsa Johansson, 2016. "Public Finance, Economic Growth and Inequality: A Survey of the Evidence," OECD Economics Department Working Papers 1346, OECD Publishing.
    16. Andrew Phiri, 2016. "The Growth Trade-off between Direct and Indirect Taxes in South Africa: Evidence from a STR Model," Managing Global Transitions, University of Primorska, Faculty of Management Koper, vol. 14(3 (Fall)), pages 233-250.
    17. Norman Gemmell & Richard Kneller & Ismael Sanz, 2014. "The growth effects of tax rates in the OECD," Canadian Journal of Economics, Canadian Economics Association, vol. 47(4), pages 1217-1255, November.
    18. Menescal, Lucas & Alves, José, 2024. "Optimal threshold taxation: An empirical investigation for developing economies," The Journal of Economic Asymmetries, Elsevier, vol. 29(C).
    19. Selahattin Imrohoroglu, 2017. "Replacing Income Taxation with Consumption Taxation in Japan," CIGS Working Paper Series 17-008E, The Canon Institute for Global Studies.
    20. Nazila Alinaghi & W. Robert Reed, 2021. "Taxes and Economic Growth in OECD Countries: A Meta-analysis," Public Finance Review, , vol. 49(1), pages 3-40, January.
    21. Minniti, Antonio & Venturini, Francesco, 2017. "The long-run growth effects of R&D policy," Research Policy, Elsevier, vol. 46(1), pages 316-326.

    More about this item

    Keywords

    budget; efficiency; taxes; diagnostics; institutions; indirect taxation; valuation methods; fiscal efficiency;
    All these keywords.

    JEL classification:

    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aiy:jnjaer:v:19:y:2020:i:1:p:19-39. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Natalia Starodubets (email available below). General contact details of provider: https://edirc.repec.org/data/seurfru.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.