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Measuring the impact of financial taxation on capital: evidence from Chilean manufacturing plants

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  • Juan A. Correa
  • Miguel Lorca
  • Francisco Parro

Abstract

Using panel data from Chilean manufacturing plants, we estimate the impact of a stamp tax, levied on loans by financial institutions, on capital stock. Our results show that the tax has a statistically significant negative effect on the stock of capital. Specifically, we find that a rise of one percentage point in the financial tax rate decreases the stock of capital by about $$4\% $$4%. We also find that the impact on firms is heterogeneous, depending on the intensity of the different types of capital they hold. In particular, the demand for capital from firms with a higher percentage of structural assets, such as land and buildings, is relatively less affected by the tax.

Suggested Citation

  • Juan A. Correa & Miguel Lorca & Francisco Parro, 2019. "Measuring the impact of financial taxation on capital: evidence from Chilean manufacturing plants," Journal of Applied Economics, Taylor & Francis Journals, vol. 22(1), pages 23-39, January.
    • Handle: RePEc:taf:recsxx:v:22:y:2019:i:1:p:23-39
    DOI: 10.1080/15140326.2018.1526866
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