The Economic and Compliance Consequences of Taxation

150 6. 2 Taxation, Economic Growth and Deadweight Loss 152 a. Introduction 152 b. The Tax/GOP Ratio and Economic Growth 155 The Tax Mix and Economic Growth 6. 3 177 6. 4 Taxation and Employment 181 a. Introduction 181 b. Unemployment: An DECO -Wide Problem 184 c. Current Explanations are Unsatisfactory 186 d. Objectives and Methodology 188 e. Labour Force Participation Responses to Tax Changes 188 f. Employment Growth Responses to Tax Changes 189 g. Unemployment Rate Responses to Tax Changes 190 h. Tax Mix Changes and Employment Effects 190 i. Deadweight Loss in Labour Markets 191 j. Conclusions 192 7. REVIEW AND ASSESSMENT OF THE HEALTH OF NEW ZEALAND'S TAX SYSTEM 7. 1 Introduction 195 Measuring the "Health" of the Tax System 7. 2 195 7. 3 Key Findings on the Total Tax level and Tax Mix 196 7. 4 Key Findings on the Hidden Economy and Tax Evasion 210 7. 5 Sources of Tax Evasion 214 7. 6 Tax Evasion Responses to Tax Changes 216 Trends in Corporate Tax Payments 219 7. 7 7. 8 Key Findings on Economic Growth and Employment 224 7. 9 'Best Practice' Tax Policy Frontiers and their Implications 229 Summary Scorecard: Economic, Compliance and Revenue Health of 7. 10 the Tax System in New Zealand 231 Appendices Working Papers on Monitoring the Health of the Tax System 1. 234 2.

Autorentext

Patrick James Caragata received his PhD in political economy from the University of Toronto in 1981. In June 1988 he moved to New Zealand and became chief economist at the Ministry of Energy where he redesigned the royalty regime for petroleum. His book Resource Pricing: Rent Recovery Options for New Zealand's Energy and Mineral Industries (1989) is now used as a standard reference tool for designing resource royalties in Asia and Latin America. In 1991 he became chief tax policy adviser with Inland Revenue in New Zealand. He redesigned the petroleum mining taxation regime in 1991, and worked extensively on international tax issues for several years. In 1994 he initiated the work to monitor the Health of the Tax System. As special adviser taxation economics he led the production of 37 working papers and the Report on the Health of the Tax System in September 1997. In October 1997 Dr. Caragata was appointed managing director of McCallum Petterson Financial Diagnostics Ltd. in Wellington. In 1998 he edited The Economic and Compliance Consequences of Taxation: A Report on the Health of the Tax System in New Zealand, also published by Kluwer Academic Publishers.

Klappentext

The Economic and Compliance Consequences of Taxation examines the impact of the tax levels (relative to GDP) and the tax mix (direct and indirect taxes relative to GDP) on economic growth and employment, and tax evasion, among other matters. The study embodies the integrated findings of 37 separate working papers released by the New Zealand Inland Revenue over the period 1994-1997. The working papers were mainly written by a team of 10 national economic and tax experts and reviewed by an external team of outside experts comprising Professors Alan Auerbach (UCLA), Richard Bird (University of Toronto), Erwin Diewert (University of British Columbia) and Jack Mintz (University of Toronto). These experts also reviewed the final report. Key questions addressed by the volume include how many changes in the tax level and mix affect: The level of tax evasion by individuals (working for others), the self-employed and small firms; The tax gap between current and potential tax revenue; and Macroeconomic indicators (the level of economic output, the rate of economic growth, and the rates of unemployment, employment generation and labour force participation) . Given existing tax system trends, including the current level of taxes and the tax mix (personal, indirect, corporate and other taxes), the specific objectives of the work are to determine whether: Tax evasion is rising or falling; The tax gap is shrinking or widening; and The prospects for economic growth and employment creation are improving or deteriorating. These objectives can be encapsulated in a summary question which the book attempts to answer: Is the tax system, by virtue of its consequences on the behaviour of individuals, firms and the economy, becoming healthier or not? Thus, are the consequences of the current tax system moving towards a best practice regime?

Inhalt

1. Background and Mandate.- 1.1 Introduction.- 1.2 The Consequences of Taxation.- 1.3 Mandate for the Report on the Health of the Tax System.- 2. Theoretical And Methodological Framework.- 2.1 Scope of the Research Project on the Health of the Tax System.- 2.2 Defining and Measuring the Health Consequences of Taxation.- 2.3 Welfare Economics and the Efficiency, or Performance, Ratio.- 2.4 Taxation and Incentive Structures.- 3. New Zealand Tax Burden & Tax Mix Trends in the Twentieth Century.- 3.1 Tax Burden Trends 18901994.- 3.2 The Ratios of Tax Revenue Streams to GDP: Total Tax/GDP Ratio.- 3.3 The Evolution of the Tax Mix.- 3.4 A Comparison of New Zealand and OECD Tax Trends.- 3.5 Total Government Expenditure Trends 19502000.- 3.6 Conclusions.- 4. The Hidden Economy, Tax Evasion And The Tax Gap.- 4.1 Introduction.- 4.2 The Legal Limits of Tax Minimisation.- 4.3 The Threat of the Hidden Economy.- 4.4 Learned Behaviour and The Theory of Incentive Structures.- 4.5 The Hidden Economy Model.- 4.6 The Learning Paths of the Hidden Economy and the Tax Gap.- 4.7 The Stakes in the Hidden Economy.- 4.8 A Simulation Model Approach to Taxation and the Hidden Economy.- 4.9 Findings, Conclusions and Implications.- 5. The Revenue Potential of the New Zealand Tax System.- 5.1 The Dimensions of Potential Revenue.- 5.2 Static Potential Revenue Under Existing Rules.- 5.3 Dynamic Revenue Potential: Long Term Tax Revenue Generation.- 5.4 Conclusions.- 6. The Macro Efficiency Effects of Taxation.- 6.1 Introduction.- 6.2 Taxation, Economic Growth and Deadweight Loss.- 6.3 The Tax Mix and Economic Growth.- 6.4 Taxation and Employment.- 7. Review And Assessment of the Health of New Zealand's Tax System.- 7.1 Introduction.- 7.2 Measuring the Health of the Tax System.- 7.3Key Findings on the Total Tax level and Tax Mix.- 7.4 Key Findings on the Hidden Economy and Tax Evasion.- 7.5 Sources of Tax Evasion.- 7.6 Tax Evasion Responses to Tax Changes.- 7.7 Trends in Corporate Tax Payments.- 7.8 Key Findings on Economic Growth and Employment.- 7.9 'Best Practice' Tax Policy Frontiers and their Implications.- 7.10 Summary Scorecard: Economic, Compliance and Revenue Health of the Tax System in New Zealand.- Appendices.- 1. Working Papers on Monitoring the Health of the Tax System.- 2. Different Approaches to Measuring Effective Tax Rates.- About the author.- References.