High Inflation, Higher Taxes and Negative Interest Rates: Are These the Villains of the Macedonian Capital Stock

Our intention in this article is to examine the possible consequences on the Macedonian capital stock generated by the ongoing economic crises, originated from the Russian – Ukraine conflict, as well as to evaluate the eventual effects on capital accumulations from the upcoming tax reform starting from January 2023. In order to deflect invading Russia, western countries nave implemented numerous sanctions, but so far they haven’t achieved their primary goal. Instead, a surge of inflation has occurred, especially on food, energy and oil, indicating on the economic fragility and energy dependency of the European countries. And this trend wasn’t exceptional for North Macedonia, on the contrary, the inflation rates are record breaking ever since 1994. Meanwhile, the monetary policy was “sluggish” and unable to offer an adequate response to the accelerated spiral of inflation. The Central bank raised the basic interest rate, but not enough to incorporate the inflation premium. As a result, the real interest rate has fallen deeply into the negative zone, which could, as we can see from the research bellow, possibly decrease the marginal productivity of capital and therefore the capital stock. On the other hand, the intended tax reform is also expected to interfere the cycle of capital accumulations, but in much smaller effect. All these determinants are examined with application of the model of domestic capital formation, developed on the foundations of Neoclassical Theory of Investment, the concept of Marginal Productivity of Capital and the principles of Marginal Effective Tax Rates. The results will reveal that there is a real possibility for sharp contraction of investment and for the first time in the last 3 decades, disruption of the perpetual cycle of capital stock in domestic economy

The Influence of Tax Culture in Improving the Tax Compliance

After decade of sluggish growth in many countries caused by the economic crises, governments inclined towards expansive fiscal policy expressed through decrease in tax rates and increase in public spending. The serious expansion followed by broad and diversified fiscal measures in public spending come to an end. Most developing countries build a higher ratio of debt to GDP that influenced on fiscal policy. The focus now is on the revenue side or exactly on tax revenues. These revenues become necessary for governments, because they impact the poverty, invest in projects that impact on the development, provide public services and the most important they build the infrastructure for long term growth. Furthermore, most of the developing countries face serious problems described through small tax base, large informal economy, weak government institutions, untruthful and corruptive administration, low levels of GDP per capita, low level of domestic savings, low levels of domestic investments, and as usually follows high rates of tax evasions by elites. All these factors were the reasons why many countries in the past inclined towards external sources for funding the government expenditures. But now we have announcements by many countries towards changes in the tax regimes with intention to impact the domestic sources of funding. That kind of action from the left governments triggered serious displeasure especially in small developing countries, which until now were used to use flat tax rates. These shift in tax policy opened one intriguing question about tax compliance, which is inevitably correlated with the concept of tax culture. This concept is new, and its main goal is to comprehend people’s behavior in fulfillment of their obligations towards the government.  Keywords  Tax culture, tax compliance, tax discipline, tax morale, tax revenues

ПАЗАРНИОТ РИЗИК И ПРИНОС КАКО ОСНОВНИ ТЕОРЕТСКИ ФУНДАМЕНТИ НА МОДЕЛОТ САРМ

Целта на овој стручен труд е да се направи преглед на теоретскиот фундамент кој му претходи на моделот на вреднување на капиталното средство, а тоа е концептот на пазарниот ризик и принос. Во негови рамки, накратко, ќе се разгледаат прашањата кои се блиски до истоимената проблематика, како што се на пример ефикасноста на финансиските пазари, арбитражната ефикасност и изборот на инвеститорот, потоа ќе следат прашањата за алфа ризикот, бета ризикот, систематскиот ризик, несистематскиот ризик, понатаму, го претставуваме накратко и од свој агол, моделот на вреднување на капиталното средство или како што оригинално се нарекува во англиската терминологија Сapital Аsset Рricing Мodel– CAPM, за да на крај се даде еден критички осврт на овој популарен модел преку прегледот на детектираните проблеми од страна на стручната литаратура. Притоа, како што ќе се види од понатамошните излагања, очекуваниот принос што го бара инвеститорот произлегува од ризикот кој одредена хартија од вредност го додава на целокупното портфолио, што впрочем е експлицитно содржано во самиот модел на САРМ. Како методи што ќе се користат при истражувањето на предметов ќе се употребуваат сите расположливи методи на научноистражувачката методолoгија, а најчесто тоа ќе бидат математичкиот и статистичкиот метод. Притоа, како облик на претставување на сознанијата ќе биде застапен графиконот, а можно е и користење на одредени хипотетички примери во насока на подобра илустрација на теоретските концепти

The Importance of Fiscal Illusion in Public Choice

This article intends to stress out a fiscal matter, firstly explored by Puviani, known asfiscal illusion. This a case of observing and reacting upon key fiscal parameters, whichcould ultimately impose distortion of fiscal choices made by the electorate. There arenumerous elements like tax structure, public expenditure, that are largely concealed sothe voters don’t have the true information about the cost of providing certain publicservices. In the countries with high public expenditure there is a high rate of indirecttaxes present, because they obscure the tax payer perception about the amount of taxpaid. This is how they gather larger amount of tax revenues which are used forfinancing public sector. The high percentage of indirect taxes in public revenues affectsthe demand for public services, because the benefits are clear as day but not theirexpenses. That kind of misperception of public sector expenditures upon existence ofindirect taxes is clear example of fiscal illusion. If the level of fiscal illusion is high, thenthe citizens are not in position to clearly see the government expenses whichcomplicates the control of public money usage. The stimulus for money control islower, because expenses are considered lower then they really are

ВРЕМЕТО, ТРОШОЦИТЕ И ПЕРФОРМАНСИТЕ – РЕЛЕВАНТНИ СИСТЕМИ ВО МЕНАЏИРАЊЕ СО ПРОЕКТИ

Организацијата, планирањето и контролата на еден проект е потребно да се постигне завршување на време, во рамките на трошоците и на потребното ниво на изведба. управувањето со проекти е за поставување и потоа постигнување на цели за време, трошоци и перформанси. Сѐ повеќе, авторите ја воведуваат безбедносната варијабла, која станува сè поважна како резултат на зголемувањето на законските одредби за здравје и безбедност. Некои автори, исто така, ја воведуваат променливата на ризик, бидејќи економската неопходност сѐ повеќе ги насочува проектите кон држави со повисок ризик. Процесите и вештините за планирање и контрола за да се заврши проект со користење на ресурси на проектот подразбираат истовремено совпаѓање или подобрување на ограничувањата на време, цена, квалитет и безбедност на прифатливо ниво на ризик. Значи, менаџирањето со проектот подразбира планирање, спроведување и завршување на проект во утврдени граници. Овие граници обично се однесуваат на времето, трошоците и перформансите и сѐ повеќе со безбедноста и ризикот

Corporate Taxation and Investment: The Case of the Split Rate Corporate Tax System in Macedonia

The majority of experts agree that taxes are distortionary in nature. This is relatively true for all of the different groups of taxes, but for the corporate taxes is exceptionally obvious. The existence of the corporate tax system can affect the company’s behavior in number of ways and one of the most criticized is the ability for distortion of the choice of the sources of finance. In the following article, we explore the effects from corporate taxation on investment, through the methodological frame of the effective marginal tax rates. The objective is to analyze the investment decision in the case of isolated implementation of corporate taxes which means that the effects from the so-called “double taxation”, induced by the personal taxes are not taken in consideration. We hope to prove that these conditions generate “uneven” distribution of the burden across the projects covered with different sources of finance. Also, we intend to test and explore the properties of some alternative corporate tax systems which are widely known as neutral, such as: the comprehensive business income tax system (CBIT), the imputation corporate tax system (ICT), the full imputation corporate tax system (FICT), the allowance for corporate equity tax system (ACE) and the split rate corporate tax system (SRCT). In addition, we support our findings with a practical example: the case study from the implementation of the split rate corporate tax system in Macedonia

Municipal Fiscal Capacity in North Macedonia

The topic of fiscal capacity in Macedonian municipalites have become one of the essential aspects of local fiscal policy within the upcoming and curently stalled proces of fiscal decentralziation in N. Macedonia. It procures arguments that could enable independent and effiecent process in collection of own revenues. The size of fiscal capacity would help significantly in creating efficient tax and budget policy in central and local government. It could also help in achieving larger independence from the central government, but also would help to achieve equallization in some financialy endangered municipalities. Therefore, the fiscal capacity sugests that the tax collection is determined from tax capacity and capacity of the administration. Differences that apear in the colected own revenues are the reason for fiscal disparity. Fundamental part of the paper is the intention to determine the main methods of estimating fiscal capaciy and to measure the potenial fiscal disparity between some of the macedonian communities. It considers the potential revenues of the municipality obtained under the curent tax base with average tax effort. It is essential that the municipality controls those sources of revenue, such as the own revenues, common taxes and earmarked conditional transfers. Statistical data sugest that the discrepancies in fiscal capacity or collected real estate tax and development fee are predetermined from the differences arising from municipal tax base and the fiscal effort. Those variations are significant between urban, rural and city of Skopje. General transfers from the central government, especialy VAT subsidies, can achieve to some extent equalization in the revenue discrepancies

Testing of the Formal Statistical Validity of a Tax Model of the Investment Demand in the Republic of Macedonia

This article is aimed for presentation of the formal testing steps of the statistical validityof a multiple regression model that explains the formation of the investment demand inthe Republic of Macedonia. This specifically developed model is based upon theconcept of the “cost of capital”, which is known as one of the most traditionalapproaches that can effectively explain the formation of the capital demand in a certaincountry, especially with interaction of changes in the tax code. Therefore, it isconsidered as an appropriate model for the purpose to unveil whether the country’s taxrates play or not a significant role for creation of the domestic demand for investment.Precisely, the statistical analysis of the presented model confirms its formal validity,since all the formal assumptions regarding the residuals of the multiple regression aregenerally satisfied. This also ensures relevance and formal justification of the chosenmodel, for its further exploitation for empirical research, while the results of thisresearch will be published in a separate article

ПРИМЕНА НА ОДРЕДЕНИ ТЕХНИКИ ЗА УПРАВУВАЊЕ СО ЗАЛИХИ НА ХИПОТЕТИЧЕН ПРИМЕР

Управувањето со залихите е интегрален дел на управувањето со обртните средства. Цел на управувањето со залихите е одржување на оптимално ниво на залихи во компанијата. Надминувањето на оваа ниво може да предизвика премногу трошоци за чување и одржување, а од друга страна кусок на залиха може да го стопира или задоцни производствениот процес. Управувањето со залихите мора да се базира на рационална екомонска cost benefit анализа. Доколку бенефитот од залихите е поголем од трошоците, тогаш е разумно команијата да ги чува залихите. Има голем број проблеми при одредување на економски оптималното ниво и за тоа како да се конвертираат или елиминираат сите релевантни вишоци или кусоци на залихите. Утврдувањето на економската количина на порачка (EOQ) и моментот на чување на нарачката е друг проблем кој е познат за овој менаџмент. На крај пресметката и анализата на коефициентите за ефикасноста на залихите го затвора прашањето за овој вид проблем. Предмет на овој труд се залихите како дел од тековните обртни средства. Примарна цел е презентирање на некои проблеми кои се познати во управувањто на залихите, како и да се елаборираат и објаснат некои можни и релевантни решенија

Tax Burden on Investment at Shareholder Level: Calculating the Effects from Double Taxation in Macedonia

The struggle against the enlarged public debt has finally ended with widespread rise of mandatory tax rates across the European countries and worldwide. Surprisingly, the Republic of Macedonia (RM) has managed to preserve its tax policy relatively unaffected, despite the negative trends - but only temporarily. Recent announcements made by the new government to raise the tax rates in near future echoed very unpleasantly across the business community, declaring the ending, in that context, of the era of low tax rates. The work in this paper is intended to measure the level of tax burden at the shareholder level in Macedonia over the period from 2006 to 2017, which is known as the “golden period” of low tax rates. Relevant measurements used for the purpose of this research are: the cost of capital, the effective marginal tax rate (EMTR) and the effective average tax rate (EATR). The applied measurements are correspondent to the fundamental methodology according to the Devereux-Griffith approach, recommended by the EU Commission. This analysis and its result are complementary to our previous findings about the effective tax rates at corporate level. Hopefully, they will reconfirm and extend the general picture of the RM as one of the most tax favorable country for investment in Europe…..so far.   Keywords  Corporate Income Tax (CIT), Personal Income Tax (PIT), double taxation, integrated tax system, cost of capital, Effective Marginal Tax Rates (EMTR), Effective Average Tax Rates (EATR), Republic of Macedonia (RM)