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21. Channeling Urban (Land) Rent Back into the Public Sector through Taxation

Author:
Bircan Polat
Publication Date:
11-2019
Content Type:
Working Paper
Institution:
Turkish Economic and Social Studies Foundation (TESEV)
Abstract:
Following the March 31, 2019 local elections, the indebtedness of local governments has once again emerged as a subject of public debate in Turkey. Local government expenditures took center stage in these debates, yet much less attention has been paid to potential sources of revenue for local governments. Generation of internal sources of municipal revenue is no less important than the issue of expenditures as it pertains to the relative financial independence of municipalities from the central government. Among potential sources of municipal revenue, a significant one is taxation on urban (land) rent which occurs as a result of a few distinct processes: transformation of agricultural land into urban land due to population increase, migration, industrialization; zoning change that renders the property more valuable due to a number of potential factors such as greater proximity to parks, attractions, or highway systems.
Topic:
Governance, Economy, Tax Systems, Public Sector, and Urban
Political Geography:
Turkey and Middle East

22. Mongolia's Missing Oil, Gas and Mining Contracts

Author:
Robert Pitman
Publication Date:
02-2019
Content Type:
Policy Brief
Institution:
Natural Resource Governance Institute
Abstract:
Many of the most important contracts for publicly owned oil, gas and minerals in Mongolia remain secret, despite government promises to make contracts public. A review of publicly available contracts in Mongolia suggests that contracts are unlikely to contain the kinds of information about a project that are commercially sensitive. Likewise, evidence suggests that there is no reason to think that confidentiality clauses prevent disclosure of contracts. Contracting regimes in Mongolia are complex and therefore in many instances, it will be necessary to publish several contracts and associated documents for each project. There are five steps that the government can take to make contracts public: 1) explain the contracting landscape, 2) define the scope of disclosure, 3) establish a contract disclosure rule, 4) make contracts accessible, and 5) support contract use.
Topic:
Civil Society, Government, Oil, Gas, Journalism, Tax Systems, Mining, Private Sector, and Contracts
Political Geography:
Mongolia and Asia

23. How Tanzania Can Secure a Good Deal for its Offshore Gas

Author:
Thomas Scurfield and David Manley
Publication Date:
09-2019
Content Type:
Policy Brief
Institution:
Natural Resource Governance Institute
Abstract:
The Tanzanian government and a consortium of companies are negotiating the regulatory terms for a game-changing liquefied natural gas (LNG) project. In this brief, the authors update a previous analysis of some of the key decisions that will be made in the negotiation and their potential impact on whether the LNG project proceeds and the levels of revenues that the project could generate for the government. This update accounts for new information and changes in company planning. There is a reasonable chance that foreign investment in the LNG project will not happen under current conditions. NRGI’s economic model and specific assumptions of the project suggest that a long-term LNG price of USD 11 per mmBtu is needed for investors to earn the return they usually require from LNG projects. Current forecasts by the IMF and World Bank are $7-8 per mmBtu. As the authors discuss in the brief, the chances of investment will shrink further if, during the negotiations, the government increases taxes and requires companies to share a greater portion of the gas with Tanzania’s home market. Government officials could wait and hope that conditions improve, and perhaps then impose stricter terms. However, this would delay the point at which the country would start generating benefits from the project. If officials want to accelerate development, without harming long-term gains for the country, they could: adopt a more progressive tax regime, avoid raising the share of gas to be sold to the home market, and establish a legal framework that both company managers and future generations of Tanzanians will trust.
Topic:
Gas, Regulation, Legislation, Tax Systems, Commodities, and State-Owned Enterprises
Political Geography:
Africa and Tanzania

24. Considerations for Taxing Myanmar’s Large-scale Mining Companies

Author:
David Manley, Sebastian Sahla, Ko Ko Lwin, and Khin Saw Htay
Publication Date:
09-2019
Content Type:
Policy Brief
Institution:
Natural Resource Governance Institute
Abstract:
Despite geological potential, Myanmar's mining sector has attracted few large-scale companies to date and the sector generates little government revenue. The authors of this briefing present the challenges the Myanmar government has faced in designing an effective mining tax regime. They suggest three ways in which the government could attract greater investment and allow the people of Myanmar to maximize benefits from the potentially significant mineral wealth of their country. The briefing is informed by the Natural Resource Governance Institute’s engagement with Myanmar’s Ministry of Natural Resources and Environmental Conservation (MONREC), helping the ministry implement strategic reforms.
Topic:
Natural Resources, Tax Systems, Mining, Private Sector, and Revenue Management
Political Geography:
Southeast Asia and Myanmar

25. Lessons for Generating Government Revenue for New and Prospective Liquefied Natural Gas Producers

Author:
Thomas Lassourd, Amir Shafaie, and Thomas Scurfield
Publication Date:
12-2019
Content Type:
Policy Brief
Institution:
Natural Resource Governance Institute
Abstract:
The market for liquefied natural gas (LNG) is changing fast, with increasing demand, new sources of supply, and a growing spot market. Over the last decade (2008 to 2018), LNG prices in the three main markets of North America, Western Europe and East Asia have diverged significantly at times, creating arbitrage opportunities for sellers. This briefing presents two case studies of developing countries that have faced challenges in securing public revenue from their natural gas industries. Trinidad and Tobago and Peru offer two examples of developing countries that faced challenges in maximizing government revenue from LNG sales during that time. Although LNG markets are evolving, these examples offer lessons for new and prospective LNG producers, especially in sub-Saharan Africa. A key area (and the focus of this briefing) is the valuation of LNG sales and the corresponding impact on government revenues. Governments should pay close attention to LNG project structure and the long-term LNG sale and purchase agreements between LNG producers and offtakers, especially when they are related companies. Governments should push for these agreements to maximize the price flowing back to the LNG plant and the upstream producer and should favor project structures that facilitate this. In particular, the practice of diverting LNG cargos to more lucrative export markets than the ones initially designated in offtake agreements should be regulated and monitored by governments to balance the financial incentives to LNG sellers with the interests of LNG-exporting countries. This will become increasingly important as the market becomes more liquid and sellers have more options.
Topic:
Government, Gas, Tax Systems, Commodities, and Revenue Management
Political Geography:
South America, Caribbean, Peru, and Trinidad and Tobago

26. The Sales Tax Proposal: Are We Beating a Dead Horse? Preliminary results from a rapid assessment

Author:
Shebo Nalishebo and Florence Banda-Muleya
Publication Date:
09-2019
Content Type:
Policy Brief
Institution:
Zambia Institute for Policy Analysis and Research (ZIPAR)
Abstract:
The fiscal authorities have argued that the horse – in this case, (value-added tax) VAT – is dead. In contrast, this rapid assessment argues that the VAT may have been pronounced dead too quickly, perhaps for expediency’s sake. Examples from many countries abound and show that with the right fiscal discipline to ring-fence VAT refunds and improve compliance, VAT works just fine, offering value-added incentives and avoiding cascading effects. In finding a solution for this supposedly dead horse, important questions that we need to ask are “Is the horse really dead? If it is, what killed the horse?” Without this introspection, the other horse in form of Sales Tax, which in fact died and was buried 25 years ago, might be resurrected. Without learning from previous experiences and experiences elsewhere, we are bound to make the same mistakes in trying to resuscitate a truly dead horse.
Topic:
Government, Tax Systems, Economic Policy, and VAT
Political Geography:
Africa and Zambia

27. Electricity provision and tax mobilization in Africa

Author:
Moussa Blimpo, Justice Tei Mensah, K. Ochieng’ Opalo, and Ruifan Shi
Publication Date:
04-2018
Content Type:
Working Paper
Institution:
Afrobarometer
Abstract:
In this paper, we provide evidence on how the provision of social infrastructure such as reliable electricity can be leveraged to increase taxation in developing countries, particularly sub-Saharan Africa (SSA). First, using comprehensive data from the latest round of the Afrobarometer survey, we estimate, via the instrumental variable approach, the effect of access and reliability of electricity on tax compliance attitudes of citizens in 36 SSA countries. Evidence from the paper shows a significant positive effect of electrification on tax compliance attitudes with potentially strong externalities. Also, we find that reliability of supply is crucial in explaining the impact of electricity access on attitudes toward taxes. Second, we provide suggestive evidence on national identity as one channel driving this impact. Access to social amenities such as electricity induces a sense of national identity among citizens, thereby incentivizing them to contribute, through taxes, toward the functioning of the state.
Topic:
Nationalism, Identities, Tax Systems, and Electricity
Political Geography:
Africa and Sub-Saharan Africa

28. Study and Reports on the VAT Gap in the EU-28 Member States: 2018 Final Report

Author:
Adam Śmietanka, Alejandro Esteller Moré, Grzegorz Poniatowski, José María Durán-Cabré, and Mikhail Bonch-Osmolovsky
Publication Date:
10-2018
Content Type:
Special Report
Institution:
Center for Social and Economic Research - CASE
Abstract:
In this Report, the Authors present the new Value Added Tax (VAT) Gap estimates for 2016, as well as updated estimates for 2012-2016. In addition to the analysis of the Compliance Gap, this Report examines the Policy Gap in 2016 as well as the contribution that reduced rates and exemptions made to the theoretical VAT revenue losses. Moreover, the Report contains an econometric analysis of VAT Gap determinants, which is a novelty introduced from this year’s Study. In 2016, most European Union (EU) Member States (MS) saw positive tailwinds with a combined real GDP growth of 2.0 percent. As a result of a growing base and increasing VAT compliance, VAT revenue increased in all MS with three exceptions. Most pronounced is the case of Romania, where VAT revenue decreased in response to reduction of the standard rate by four percentage points. In nominal terms, in 2016, the VAT Gap in EU-28 MS fell below EUR 150 billion and amounted to EUR 147.1 billion. In relative terms, the VAT Gap share of the VAT total tax liability (VTTL) dropped to 12.3 percent from 13.2 percent in 2015, and is the lowest value in the analysed period of 2012-2016. Denoted at the share of GDP, the VAT Gap in 2016 amounted to 0.99% compared to 1.05% in 2015. Of the EU-28, the VAT Gap share decreased in 22 countries and increased in six—namely, Romania, Finland, the UK, Ireland, Estonia, and France. The biggest declines in the VAT Gap—of over five percentage points—occurred in Bulgaria, Latvia, Cyprus, and the Netherlands. The smallest Gaps were observed in Luxembourg (0.85 percent), Sweden (1.08 percent), and Croatia (1.15 percent). The largest Gaps were registered in Romania (35.88 percent), Greece (29.22 percent), and Italy (25.90 percent). Overall, half of EU-28 MS recorded a Gap below 9.9 percent. The Policy Gaps and its components remained stable. The average Policy Gap level was 44.8 percent, out of which 9.95 percentage points are due to the application of various reduced and super-reduced rates (the Rate Gap). Countries with the most flat levels of rates in the EU, according to the Rate Gap, are Denmark (0.93 percent) and Estonia (2.97 percent). The Exemption Gap, or the average share of Ideal Revenue lost due to various exemptions, is, on average, 35 percent in the EU, whereas the Actionable Policy Gap—a combination of the Rate Gap and the Actionable Exemption Gap—is, on average, 16.5 percent of the Notional Ideal Revenue. The econometric analysis can be considered a successful first attempt at inferring the impact of various determinants. Firstly, it can be observed that the productive structure of the economy exerts an impact on the VAT Gap. The share of retailers has the strongest impact on the VAT Gap; however, telecommunications, industry, and art also have a positive impact. Secondly, liquidity constraints and the productive structure of the economy also play a role in determining VAT compliance. The most interesting results have to do with the impact of the variables under the direct control of the tax administration. We show that the impact of the size of the tax administration and the VAT Gap is concave. On the contrary, in the case of IT expenditure, the impact is convex, albeit small, until productivity vanishes when IT expenditure is about 9.8 percent of the total expenditure of the tax administration.
Topic:
Financial Crimes, Tax Systems, Fiscal Policy, and VAT
Political Geography:
Europe, Poland, and European Union

29. The Stupendous US Record Gets Suppressed

Author:
Amity Shlaes
Publication Date:
03-2018
Content Type:
Special Report
Institution:
Center for Social and Economic Research - CASE
Abstract:
In recent years, the consensus regarding the American past has slipped leftward, and then leftward again. No longer is American history a story of opportunity, or of military or domestic triumph. America’s has become, rather, a story of wrongs, racial and social. Today, any historical figure who failed at any time to support abolition, or, worse, took the Confederate side in the Civil War, must be expunged from history. Wrongs must be righted, and equality of result enforced. The equality campaign spills over into a less obvious field, one that might otherwise provide a useful check upon the non-empirical claims of the humanities: economics. In a discipline that once showcased the power of markets, an axiom is taking hold: equal incomes lead to general prosperity, and point toward utopia. Teachers, book club presidents, and especially professors withhold any evidence to the contrary. Universities lead the shift, and the population follows. Today, millennials, those born between 1982 and 2000, outnumber baby boomers by the millions, and polls suggest that they support redistribution specifically, and government action generally, more than their predecessors. A 2014 Reason/Rupe poll found 48 percent of millennials agreeing that government should “do more” to solve problems, whereas 37 percent said that government was doing “too many things.” A full 58 percent of the youngest of millennials, those 18-24 when surveyed, held a “positive” view of socialism, in dramatic contrast with their parents: only 23 percent of those aged 55 to 64 viewed socialism positively.
Topic:
Government, Markets, History, Economy, Economic growth, Tax Systems, Free Trade, and Welfare
Political Geography:
North America and United States of America

30. Taxing multinational corporations in the 21st century

Author:
Gabriel Zucman
Publication Date:
09-2018
Content Type:
Policy Brief
Institution:
Economics for Inclusive Prosperity (EfIP)
Abstract:
Globalization and the rise of intangible capital have increased tax avoidance opportunities for large firms dramatically. 40% of multinational profits are shifted to tax havens each year globally and the United States loses about 15% of its corporate income tax revenue because of this shifting. I discuss the evidence on the redistributive effects of international tax competition. I then present a proposal to reform the corporate tax that would remove any incentive for firms to shift profits or move real activity to lowtax places. Contrary to a widespread view, it is possible to tax multinational companies (potentially at high rates) in a globalized world, even in the absence of international policy coordination.
Topic:
Economics, Globalization, Regulation, Multinational Corporations, Tax Systems, Economic Policy, and Economic Theory
Political Geography:
Global Focus