How Does Trust Affect Concessionary Behavior in Tax Bargaining?
In: WU International Taxation Research Paper Series No. 2020-15
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In: WU International Taxation Research Paper Series No. 2020-15
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In: European journal of political research: official journal of the European Consortium for Political Research, Band 5, Heft 4, S. 363-380
ISSN: 1475-6765
ABSTRACTMultinational corporations can play off host governments to minimise their tax payments in the absence of internationally coordinated fiscal policies. Without a supranational enforcement agency, most tax harmonization policies are unstable because one or another signatory always has an incentive to break ranks. This produces a sub‐optimal tax harvest for a group of host governments taken as a whole. This is a collective action problem for host governments which can be stated in the form of a Prisoner's Dilemma supergame. Equilibrium cooperative solutions have been suggested for this game which do not need higher authorities to enforce them. The application of these solutions to the host governments' tax problem is discussed, with the conclusion that under certain conditions self‐policing tax harmonization agreements are possible.
It is increasingly argued that bargaining between citizens and governments over tax collection can provide a foundation for the development of responsive and accountable governance in developing countries. However, while intuitively attractive, surprisingly little research has captured the reality and complexity of this relationship in practice. This book provides the most complete treatment of the connections between taxation and accountability in developing countries, providing both new evidence and an invaluable starting point for future research. Drawing on cross-country econometric evidence and detailed case studies from Ghana, Kenya and Ethiopia, Wilson Prichard shows that reliance on taxation has, in fact, increased responsiveness and accountability by expanding the political power wielded by taxpayers. Critically, however, processes of tax bargaining have been highly varied, frequently long term and contextually contingent. Capturing this diversity provides novel insight into politics in developing countries and how tax reform can be designed to encourage broader governance gains
In: African affairs: the journal of the Royal African Society, Band 119, Heft 475, S. 177-202
ISSN: 1468-2621
Many Sub-Saharan African countries are unable to generate sufficient tax revenues for public purposes. While it is widely accepted that governments' ability to tax is shaped by politics, the precise mechanisms through which this relationship takes place in practice remain elusive. Based on a historical analysis of four major tax reforms in Ghana from the 1850s to the late 1990s, this article captures the various ways in which taxpayers negotiate with the state in an attempt to limit the extent of taxation, especially in cases where state reciprocity falls short of what people expect. Our evidence suggests that, far from being a recent development, effective taxation in Ghana has long depended on the ability of the state to convince taxpayers that tax revenues will be used for the public benefit. A history of misappropriation of tax revenues, overt corruption, and profligacy diminished taxpayers' support for governments' tax efforts. More generally, the article points to the importance of understanding how tax bargaining works in practice and people's perceptions of their governments over the long term to overcome resistance to tax reforms.
In: African affairs: the journal of the Royal African Society, Band 115, Heft 460, S. 575-577
ISSN: 1468-2621
In: British journal of political science, Band 48, Heft 2, S. 427-457
ISSN: 1469-2112
Studies of political budget cycles in developing countries have generally sought to inform understanding of short-term fiscal dynamics, but can also offer unique insight into broader political dynamics in developing countries. This article correspondingly employs markedly improved data in order to study the impact of elections on tax collection, and draw broader lessons. It shows that while electionsas a grouphave had no significant effect on tax collection, the subset ofcompetitive electionshas had a significant negative impact on pre-election tax collection; while this effect appears to be largest where incumbents are particularly unpopular. This provides powerful evidence that the impact of elections on political incentives in developing countries is conditioned by the existence of an electorally competitive opposition, while offering preliminary evidence that popular resistance to taxation by unpopular governments may be an important means by which taxpayers may generate pressure for improved governance.
In: Working Paper of the Max Planck Institute for Tax Law and Public Finance No. 2012-02
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In: Oxford Research Encyclopedia of Politics
"Tax, Politics, and the Social Contract in Africa" published on by Oxford University Press.
In: The B.E. journal of theoretical economics, Band 16, Heft 2
ISSN: 1935-1704
AbstractThis paper deals with the neutrality of profit taxes levied on firms as well as the implications of tax evasion in economies with right-to-manage wage formation and efficient bargaining, respectively. Contrary to the outcome under competitive labor markets, we show that profit taxes are not neutral and the firm's tax evasion decision is not separable from its production decision under right-to-manage wage formation, where a trade union and firm bargain over the wage rate (except in the special case of a monopoly union). A similar conclusion follows from an efficient bargaining model, where a trade union and firm bargain over both the wage rate and employment. In addition, wage bargaining plays an important role in determining the optimal profit tax and the enforcement policy.
In: Journal of economics, Band 66, Heft 2, S. 127-150
ISSN: 1617-7134
In: Mathematical social sciences, Band 64, Heft 2, S. 173-192
In: Springer eBook Collection
Unemployment remains a major problem for economic policy at the beginning of the millennium. Taxes and Unemployment investigates how tax policy affects labor market outcomes in industrialized countries and to what extent it can be used to combat unemployment. In particular, the wage and employment consequences of tax rate variations, the impact of changes in tax progression and of comprehensive tax reforms are analyzed. It is shown that the employment effects of tax policy depend crucially on the institutional features of the labor market. These features are often country-specific and include the strength of collective bargaining institutions relative to other mechanisms of wage determination, the tax treatment of the jobless, the legal incidence of taxes and the exact specification of the tax system. Therefore, Taxes and Unemployment advocates an approach to reducing unemployment which is tailored to the specific characteristics of labor markets. Moreover, the analysis indicates that tax reforms need to be supported by other policy measures to regain full employment
In: CESifo Working Paper Series No. 6979
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In: CEPR Discussion Paper No. DP13143
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