Raising Revenue with Transaction Taxes in Latin America - Or Is It Better to Tax with the Devil You Know?
In recent years, various Latin American governments have resorted to taxes on bank debits and financial transactions as alternative ways of raising revenue. Considerable interest has developed in understanding the consequences of such reforms. The...
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
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World Bank, Washington, D.C.
2013
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| Online Access: | http://documents.worldbank.org/curated/en/2004/04/3401982/raising-revenue-transaction-taxes-latin-america-or-better-tax-devil-know http://hdl.handle.net/10986/14773 |
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okr-10986-147732021-04-23T14:03:20Z Raising Revenue with Transaction Taxes in Latin America - Or Is It Better to Tax with the Devil You Know? Suescún, Rodrigo ACCOUNTING ALTERNATIVE TAX REFORMS AVERAGE TAX RATES BENCHMARK BUDGET CONSTRAINTS CAPITAL ACCUMULATION CAPITAL GAINS CAPITAL INCOME CAPITAL STOCK CAPITAL-LABOR CAPITAL-LABOR RATIO CAPITAL-LABOR RATIOS CENTRAL BANK CONSUMPTION EXPENDITURES CONSUMPTION TAXES CONVENTIONAL WISDOM DISTORTIONARY EFFECTS ECONOMIC GROWTH ECONOMIC RESOURCES ECONOMIC THEORY ECONOMIC WELFARE EMPIRICAL STUDIES EQUATIONS EQUILIBRIUM EXPENDITURES EXTERNALITY FACTOR PRICING FINANCIAL CRISIS FINANCIAL INTERMEDIARIES FINANCIAL INTERMEDIATION FINANCIAL TRANSACTIONS FISCAL POLICIES FISCAL POLICY FOREIGN EXCHANGE GDP GENERAL EQUILIBRIUM MODEL GENERAL EQUILIBRIUM SYSTEM GOVERNMENT BONDS GOVERNMENT FINANCE GROSS OUTPUT GROWTH MODEL GROWTH MODELS GROWTH PATH GROWTH RATE HUMAN CAPITAL INCOME INCOME TAXES INEFFICIENCY INPUT PRICES INTERMEDIATE GOODS INTERMEDIATE INPUT INTERMEDIATE INPUTS LABOR INPUT LABOR SUPPLY LAWS LEISURE LEVEL PLAYING FIELD MARGINAL COST MARGINAL PRODUCT OIL OIL PRICES OUTPUT RATIO POLICY MAKERS PRODUCTION FUNCTION PRODUCTION PROCESS PRODUCTION TECHNOLOGY PRODUCTIVITY RATE OF RETURN REAL INTEREST RATE RELATIVE PRICES RENTAL PRICE OF CAPITAL RESOURCE ALLOCATION STREAMS TAX TAX COLLECTION TAX RATES TAX REFORM TAX REFORMS TAX REVENUE TAXATION TECHNICAL CHANGE TIME SERIES TRANSFER PAYMENTS TREASURY TURNOVER TAXES UTILITY FUNCTION VALUE ADDED REVENUE SOURCES REVENUE MOBILIZATION TAXATION BANK DEBIT CARDS FINANCIAL OPTIONS TRANSACTIONS TAX REFORMS TAX RATES ECONOMIC GROWTH INCOME TAXES CAPITAL GAINS TAXES In recent years, various Latin American governments have resorted to taxes on bank debits and financial transactions as alternative ways of raising revenue. Considerable interest has developed in understanding the consequences of such reforms. The author constructs a dynamic general equilibrium model to assess the size of distortions and other quantitative implications associated with a transaction tax. The distinctive feature of the model is the non-neutrality property of the tax in the sense that it distorts the structure of relative prices of intermediate transactions, giving rise to tax "pyramidation." The effective tax rate ultimately borne by the economy is shown to depend on the complexity of the transaction structure. Calibrated for Latin America, the model finds that, contrary to existing evidence and conventional wisdom, a transaction tax is not a particularly burdensome levy in terms of economic growth and efficiency costs. The model also shows that if a government can credibly commit itself to an announced two-step reform in which it first uses a transaction tax temporarily and then replaces it with any other conventional tax, this policy will improve economic welfare relative to a tax reform where a consumption tax (or a labor income tax or a capital earnings tax) is exclusively used from the start to raise the required additional revenue. 2013-08-02T14:08:17Z 2013-08-02T14:08:17Z 2004-04 http://documents.worldbank.org/curated/en/2004/04/3401982/raising-revenue-transaction-taxes-latin-america-or-better-tax-devil-know http://hdl.handle.net/10986/14773 English en_US Policy Research Working Paper;No.3279 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, D.C. Publications & Research :: Policy Research Working Paper Publications & Research Latin America & Caribbean |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
ACCOUNTING ALTERNATIVE TAX REFORMS AVERAGE TAX RATES BENCHMARK BUDGET CONSTRAINTS CAPITAL ACCUMULATION CAPITAL GAINS CAPITAL INCOME CAPITAL STOCK CAPITAL-LABOR CAPITAL-LABOR RATIO CAPITAL-LABOR RATIOS CENTRAL BANK CONSUMPTION EXPENDITURES CONSUMPTION TAXES CONVENTIONAL WISDOM DISTORTIONARY EFFECTS ECONOMIC GROWTH ECONOMIC RESOURCES ECONOMIC THEORY ECONOMIC WELFARE EMPIRICAL STUDIES EQUATIONS EQUILIBRIUM EXPENDITURES EXTERNALITY FACTOR PRICING FINANCIAL CRISIS FINANCIAL INTERMEDIARIES FINANCIAL INTERMEDIATION FINANCIAL TRANSACTIONS FISCAL POLICIES FISCAL POLICY FOREIGN EXCHANGE GDP GENERAL EQUILIBRIUM MODEL GENERAL EQUILIBRIUM SYSTEM GOVERNMENT BONDS GOVERNMENT FINANCE GROSS OUTPUT GROWTH MODEL GROWTH MODELS GROWTH PATH GROWTH RATE HUMAN CAPITAL INCOME INCOME TAXES INEFFICIENCY INPUT PRICES INTERMEDIATE GOODS INTERMEDIATE INPUT INTERMEDIATE INPUTS LABOR INPUT LABOR SUPPLY LAWS LEISURE LEVEL PLAYING FIELD MARGINAL COST MARGINAL PRODUCT OIL OIL PRICES OUTPUT RATIO POLICY MAKERS PRODUCTION FUNCTION PRODUCTION PROCESS PRODUCTION TECHNOLOGY PRODUCTIVITY RATE OF RETURN REAL INTEREST RATE RELATIVE PRICES RENTAL PRICE OF CAPITAL RESOURCE ALLOCATION STREAMS TAX TAX COLLECTION TAX RATES TAX REFORM TAX REFORMS TAX REVENUE TAXATION TECHNICAL CHANGE TIME SERIES TRANSFER PAYMENTS TREASURY TURNOVER TAXES UTILITY FUNCTION VALUE ADDED REVENUE SOURCES REVENUE MOBILIZATION TAXATION BANK DEBIT CARDS FINANCIAL OPTIONS TRANSACTIONS TAX REFORMS TAX RATES ECONOMIC GROWTH INCOME TAXES CAPITAL GAINS TAXES |
| spellingShingle |
ACCOUNTING ALTERNATIVE TAX REFORMS AVERAGE TAX RATES BENCHMARK BUDGET CONSTRAINTS CAPITAL ACCUMULATION CAPITAL GAINS CAPITAL INCOME CAPITAL STOCK CAPITAL-LABOR CAPITAL-LABOR RATIO CAPITAL-LABOR RATIOS CENTRAL BANK CONSUMPTION EXPENDITURES CONSUMPTION TAXES CONVENTIONAL WISDOM DISTORTIONARY EFFECTS ECONOMIC GROWTH ECONOMIC RESOURCES ECONOMIC THEORY ECONOMIC WELFARE EMPIRICAL STUDIES EQUATIONS EQUILIBRIUM EXPENDITURES EXTERNALITY FACTOR PRICING FINANCIAL CRISIS FINANCIAL INTERMEDIARIES FINANCIAL INTERMEDIATION FINANCIAL TRANSACTIONS FISCAL POLICIES FISCAL POLICY FOREIGN EXCHANGE GDP GENERAL EQUILIBRIUM MODEL GENERAL EQUILIBRIUM SYSTEM GOVERNMENT BONDS GOVERNMENT FINANCE GROSS OUTPUT GROWTH MODEL GROWTH MODELS GROWTH PATH GROWTH RATE HUMAN CAPITAL INCOME INCOME TAXES INEFFICIENCY INPUT PRICES INTERMEDIATE GOODS INTERMEDIATE INPUT INTERMEDIATE INPUTS LABOR INPUT LABOR SUPPLY LAWS LEISURE LEVEL PLAYING FIELD MARGINAL COST MARGINAL PRODUCT OIL OIL PRICES OUTPUT RATIO POLICY MAKERS PRODUCTION FUNCTION PRODUCTION PROCESS PRODUCTION TECHNOLOGY PRODUCTIVITY RATE OF RETURN REAL INTEREST RATE RELATIVE PRICES RENTAL PRICE OF CAPITAL RESOURCE ALLOCATION STREAMS TAX TAX COLLECTION TAX RATES TAX REFORM TAX REFORMS TAX REVENUE TAXATION TECHNICAL CHANGE TIME SERIES TRANSFER PAYMENTS TREASURY TURNOVER TAXES UTILITY FUNCTION VALUE ADDED REVENUE SOURCES REVENUE MOBILIZATION TAXATION BANK DEBIT CARDS FINANCIAL OPTIONS TRANSACTIONS TAX REFORMS TAX RATES ECONOMIC GROWTH INCOME TAXES CAPITAL GAINS TAXES Suescún, Rodrigo Raising Revenue with Transaction Taxes in Latin America - Or Is It Better to Tax with the Devil You Know? |
| geographic_facet |
Latin America & Caribbean |
| relation |
Policy Research Working Paper;No.3279 |
| description |
In recent years, various Latin American
governments have resorted to taxes on bank debits and
financial transactions as alternative ways of raising
revenue. Considerable interest has developed in
understanding the consequences of such reforms. The author
constructs a dynamic general equilibrium model to assess the
size of distortions and other quantitative implications
associated with a transaction tax. The distinctive feature
of the model is the non-neutrality property of the tax in
the sense that it distorts the structure of relative prices
of intermediate transactions, giving rise to tax
"pyramidation." The effective tax rate ultimately
borne by the economy is shown to depend on the complexity of
the transaction structure. Calibrated for Latin America, the
model finds that, contrary to existing evidence and
conventional wisdom, a transaction tax is not a particularly
burdensome levy in terms of economic growth and efficiency
costs. The model also shows that if a government can
credibly commit itself to an announced two-step reform in
which it first uses a transaction tax temporarily and then
replaces it with any other conventional tax, this policy
will improve economic welfare relative to a tax reform where
a consumption tax (or a labor income tax or a capital
earnings tax) is exclusively used from the start to raise
the required additional revenue. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Suescún, Rodrigo |
| author_facet |
Suescún, Rodrigo |
| author_sort |
Suescún, Rodrigo |
| title |
Raising Revenue with Transaction Taxes in Latin America - Or Is It Better to Tax with the Devil You Know? |
| title_short |
Raising Revenue with Transaction Taxes in Latin America - Or Is It Better to Tax with the Devil You Know? |
| title_full |
Raising Revenue with Transaction Taxes in Latin America - Or Is It Better to Tax with the Devil You Know? |
| title_fullStr |
Raising Revenue with Transaction Taxes in Latin America - Or Is It Better to Tax with the Devil You Know? |
| title_full_unstemmed |
Raising Revenue with Transaction Taxes in Latin America - Or Is It Better to Tax with the Devil You Know? |
| title_sort |
raising revenue with transaction taxes in latin america - or is it better to tax with the devil you know? |
| publisher |
World Bank, Washington, D.C. |
| publishDate |
2013 |
| url |
http://documents.worldbank.org/curated/en/2004/04/3401982/raising-revenue-transaction-taxes-latin-america-or-better-tax-devil-know http://hdl.handle.net/10986/14773 |
| _version_ |
1764430167733698560 |