Taxation

Fabio Ghironi, 05 July 2019

Are Italy's populist policies of miniBOTs and flat taxes the right medicine for its economic sickness? Fabio Ghironi tells Tim Phillips that, if Italy doesn't attempt fundamental structural reforms, it may be on the path to Eurexit.

Pablo Brañas, Antonio Cabrales, Guillermo Mateu, Anxo Sánchez, Angela Sutan, 22 May 2019

Pre-negotiation interactions, such as shared meals, are viewed as a valuable means to build trust and rapport so as to improve the outcomes of the negotiation. Even tax authorities acknowledge this – business meals tend to be tax-deductible, at least in part. This column puts this folk wisdom to the test using a controlled negotiation simulation experiment with MBA students. It finds that there is no difference in negotiation outcomes whether or not pre-negotiation socialising took place.

Joel Slemrod, Obeid Ur Rehman, Mazhar Waseem, 15 May 2019

Governments typically seek to reduce tax evasion by increasing the odds of catching tax evaders or by raising the punishments. Using social and psychological motivations may offer another approach to promoting tax compliance. This column analyses two Pakistani initiatives – public disclosure of income taxes and a recognition-and-rewards programme for top taxpayers – and shows that, to the extent that they are effective in influencing private and social behaviour, they potentially offer a cost-effective complement to standard tax-evasion measures. 

Samara Gunter, Daniel Riera-Crichton, Carlos Vegh, Guillermo Vuletin, 01 May 2019

Based on evidence from the industrial world, and particularly Europe, tax hikes have a significant negative effect on economic activity. The column shows that this empirical finding does not hold for a broader sample. In the developing world, higher taxes may be an effective way to raise revenues without reducing GDP. This is especially true in countries with low provision of public goods or commodity-dependent countries.

Jean Hindriks, Valerio Serse, 19 April 2019

Alcohol tax pass-through can vary substantially across products, but it also depends on the location of stores. This column examines retail prices of six major brands of spirits in Belgium after a tax reform, and finds evidence that the impact on prices varied across regions. These variations depended on the intensity of local competition and, to a lesser extent, proximity to national borders. 

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