¡Descarga Public Revenues in Spain: Types, Measures and Comparative Perspective - Prof. anónimo y más Apuntes en PDF de Administración de Empresas solo en Docsity! Topic 3: Public Revenues Business Administration and Management Fall 2016-2017 Departament of Public Economics 1 Outline 1. Types of revenues 2. Public revenue in Spain 3. A comparative perspective 4. Tax measures 2 1. Main categories of public revenues (Spain) • CURRENT REVENUES – Chapter I: Direct taxes – Chapter II: Indirect taxes – Chapter III: Fees, public prices – and other revenues – Chapter IV: Current transfers – Chapter V: Revenues from assets • CAPITAL REVENUES – Chapter VI: Disposal of real assets – Chapter VII: Capital transfers • FINANCIAL REVENUES – Chapter VIII: Financial assets – Chapter IX: Financial liabilities Focus on chapters I to III 1. Main categories of public revenues (Spain) • CURRENT REVENUES: Chapter I: Direct taxes There is a direct connection between the earning behavior of the taxpayer and the amount of tax paid. 1. Income Tax, Corporate Tax, Tax on Inheritances and Gifts, Property tax – Mandatory – No direct compensation – Dedicated to finance the comprehensive budget (not earmarked tax) 2. Contribution to Social Security – Mandatory – Direct compensation – Earmarked tax 1. Main categories of public revenues (Spain) • CURRENT REVENUES: Chapter II: Indirect taxes There is not a direct connection between the earning behavior of the taxpayer and the tax paid. 1. VAT, Special Taxes, Tax on Property transfers – Mandatory nature – Without direct compensation – Dedicated to finance the comprehensive budget (not earmarked tax) 2. Healthcare “centimo” (tax on hydrocarbon retail trade) - IVMHC) – Mandatory nature – Without direct compensation – Earmarked tax (finances the public health system) 2. Public revenues in Spain (2009) - Sources € Milions % of Total % of GDP Taxes 333.181 61,2 31,7 * Taxes on production and imports 91.796 16,9 8,7 * Current revenues on income, wealth etc. 101.024 18,6 9,6 * Social contributions 140.361 25,8 13,4 Fees, public prices and other revenues 12.998 2,4 1,2 Transfers 8.134 1,5 0,8 * Current transfers 8.957 1,6 0,9 * Capital transfers -823 -0,2 -0,1 Rent of properties 10.706 2,0 1,0 Total of non-financial resources 365.019 67,1 34,7 Financial transactions 179.237 32,9 17,1 * Financial assets 3.315 0,6 0,3 * Financial liabilities 175.922 32,3 16,7 TOTAL OF PUBLIC REVENUES 544.256 100,0 51,8 Source: Own elaboration from IGAE (2011): Avance de la Actuación Económica y Financiera de las Administraciones Públicas, 2009, y presupuestos del Estado, CCAA y CCLL. 3. A comparative perspective • Taxation across the globe • VAT across Europe • Trend in Taxation during the crisis • Taxes on labor 11 3. A comparative perspective Taxation across the globe 12 EU has generally higher level of taxation compared to other high income countries 3. A comparative perspective
VAT across Europe
Cyprus
Czech Republic
Denmark
Estonia
Finland
France
Germany
Greece
Hungary
Lithuania
Luxembourg
Malta
Netherlands
Poland
Portugal
Romania
Slovakia
Slovenia
Spain
Sweden
United King:
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16 Both direct and indirect taxes increased during the crisis 3. A comparative perspective Recent trend in taxation (EU) 17 Source: OECD Revenue Statistics (2011) Taxes on the average worker (as a percentage of labor cost) • this tax wedge measures the extent to which the tax system on labor income discourages employment. • Also in this case, EU have a higher taxation compared to US 3. A comparative perspective Taxation on labour 3. The origins of the welfare Example 2: Taxation differences between EU and US 20 Source: The Political Economics of Redistributive Policies Vincenzo Galasso (Bocconi University) 3. The origins of the welfare Reciprocal altruism and redistribution: voters dislike giving money to the poor, if the poor are perceived as “lazy” US: poor are perceived relatively more as “lazy” EU: poor are perceived relatively more as unfortunate Racial factors: racial fragmentation is a powerful predictor of redistribution and minorities are highly over-represented amongst the poorest Americans 26-11-2014 21 3. The origins of the welfare However, (real) social mobility is not different between US and EU! 26-11-2014 22 4. Tax measures • Statutory tax rate – Tax rate as defined by the tax law – Usually more than one rate (tax scale: tax brackets vs. continuous rate) – 𝜏𝑠𝑡𝑎𝑡𝑢𝑡𝑜𝑟𝑦 • Marginal tax rates (MgR) – amount of tax paid on an additional unit of income – 𝜏𝑚𝑎𝑟𝑔𝑖𝑛𝑎𝑙 = ∆𝑇𝑎𝑥 𝑅𝑒𝑣𝑒𝑛𝑢𝑒 ∆𝑇𝑎𝑥 𝐵𝑎𝑠𝑒 25 4. Tax measures • Average tax rate (AvR) – Average tax rate for a given tax scale – 𝜏𝑎𝑣𝑒𝑟𝑎𝑔𝑒 = 𝑇𝑎𝑥 𝑅𝑒𝑣𝑒𝑛𝑢𝑒 𝑁𝑒𝑡 𝑇𝑎𝑥 𝐵𝑎𝑠𝑒 = 𝑇𝑎𝑥 𝐵𝑢𝑟𝑑𝑒𝑛 𝑁𝑒𝑡 𝑇𝑎𝑥 𝐵𝑎𝑠𝑒 • Effective tax rate (EfR) – 𝜏𝑒𝑓𝑓𝑒𝑐𝑡𝑖𝑣𝑒 = 𝑇𝑎𝑥 𝑅𝑒𝑣𝑒𝑛𝑢𝑒 𝑇𝑎𝑥 𝐵𝑎𝑠𝑒 = 𝑇𝑎𝑥 𝐵𝑢𝑟𝑑𝑒𝑛 𝑇𝑎𝑥 𝐵𝑎𝑠𝑒 • Implicit tax rate - tax-to-GDP ratios – 𝜏𝑖𝑚𝑝𝑙𝑖𝑐𝑖𝑡 = 𝑇𝑎𝑥 𝑅𝑒𝑣𝑒𝑛𝑢𝑒 𝑇𝑎𝑥 𝐵𝑎𝑠𝑒 ∙ 𝑇𝑎𝑥 𝐵𝑎𝑠𝑒 𝐺𝐷𝑃 = 𝑇𝑎𝑥 𝑅𝑒𝑣𝑒𝑛𝑢𝑒 𝐺𝐷𝑃 26 4. Tax measures – example (1/2) 27 How much taxes will pay a person whose Net tax base is equal to 250 units? Continuous rate: Tax brackets: Net Tax Base: Rate Net Tax Base : Rate Up to 100 5% 0 - 100 5% Up to 200 10% 101 - 200 10% Up to 300 15% 201 - 299 15% Continuous rate: T = 250 x 15% = 37.5 units Tax brackets: T = 100 x 5% + 100 x 10% + 50 x 15% = 22.5 units
