Taxation

[field_auth], 06 July 2016

Evidence shows that individuals often do not act in a completely selfish manner, but rather take into account the welfare of other parties when making decisions. But how decision-makers trade off costs and benefits when the costs are dispersed among many individuals is unclear. This column discusses new experimental evidence showing that a large fraction of individuals are ‘insensitive to group size’, attaching similar weights to small and large groups. These findings provide a new explanation for a number of empirical patterns, including political and medical decision-making, lobbying, tax evasion, and charity donations.

[field_auth], 18 June 2016

Japan’s prime minister recently announced that a planned 2% VAT increase would be postponed from 2017 to 2019. This column explores how Japanese household consumption adjusted to a VAT increase that was announced in 2013 and implemented in 2014. Household consumption fell by around 4% upon announcement and 1% upon implementation, suggesting that most of the negative impact of a VAT rate increase occurs at the time of the announcement. 

[field_auth], 14 June 2016

Although not a nudge, the ‘soda tax’ in the UK can nonetheless be justified in part on behavioural grounds. This column analyses the potential effectiveness of the soda tax in reducing consumption. As a behavioural instrument, the tax does not go far enough, and is in fact regressive.  A comprehensive junk food tax should be introduced instead, accompanied by nudges, ‘healthy’ subsidies, and regulation of ‘super-sizing’ practices.

[field_auth], 21 May 2016

Increased globalisation since the mid-1990s has eroded some of the tax bases of many economies. At the same time, demand for public goods has risen and governments face the challenge of financing greater public expenditure with lower tax revenues. This column discusses tax policy responses to increasing globalisation, showing that since the mid-1990s governments in OECD countries have increasingly relied on revenues from employee-borne rather than firm-borne taxes. Due to the greater mobility of capital and high-skilled workers, who are able to escape higher taxes more easily, the middle classes have carried much of the additional tax burden.

[field_auth], 27 April 2016

The Eurozone faces zero inflation paired with low economic growth. With monetary policy hobbled by the zero lower bound, it is time to think more broadly. This column discusses the theoretical and empirical evidence on ‘unconventional fiscal policy’.  Such policies aim to increase growth and inflation in a budget-neutral fashion, while keeping the tax burden on households constant.

Other Recent Articles:

Events