Consumption Taxation in a Digital World: A Primer

The paper reviews the economic and administrative issues that arise in the taxation of electronic commerce; addresses how best to meet the criteria of an ideal tax system; and examines recent policy developments.It is argued that destination-based taxation-is presently the norm for goods taxation is technically more complex for digital products and intangible services sold over the Internet, reflecting the difficulty of determining the location of the buyer and seller.Most of the potential solutions to this problem require a great deal of administrative cooperation between national tax authorities.Case studies of several countries show that policy responses to electronic commerce have di.ered, with the European Union taking the lead on implementing a system of destination-based registration.Destination principle;international consumption taxation;electronic commerce;origin taxation;cross-border trade

Coordinating Tariff Reduction and Domestic Tax Reform under Imperfect Competition

A major constraint on trade liberalization in many countries is the prospective loss of government revenue.Recent results, however, have established a simple and appealing strategy for overcoming this difficulty, whilst still realizing the efficiency gains from liberalization, in small, competitive economies: combining tariff cuts with point-for-point increases in destination-based consumption taxes unambiguously increases both national welfare and total government revenue.This note explores the implications of imperfect competition for this strategy.Examples are easily found in which this strategy unambiguously reduces domestic welfare.tariffs;tax reform;imperfect competition

A method for improving Centre for Environmental Studies (CML) characterisation factors for metal (eco)toxicity - the case of zinc gutters and downpipes

Background, aim and scope - The environmental impact of building products made from heavy metals has been a topic of discussion for some years. This was fuelled by results of life cycle assessments (LCAs), where the emission of heavy metals strongly effected the results. An issue was that the characterisation factors of the Centre for Environmental Studies (CML) 2000 life cycle impact assessment (LCIA) methodology put too much emphasis on the impact of metal emissions. We adjusted Zn characterisation factors according to the most recent insights in the ecotoxicity of zinc and applied them in an LCA using zinc gutters and downpipes as an example. Materials and methods - The CML 2000 methodology was used to assess the environmental impact of the zinc products. To adjust the Zn characterisation factors, the uniform system for the evaluation of substances (USES)–LCA model and the biotic ligand model were used. Results and discussion - The first correction was based on updating the effect values for zinc. This resulted in a reduction of the characterisation factors for zinc to 42% of their original values. Additional correcting for the bioavailability of zinc leads to final Zn characterisation factors for the freshwater aquatic ecotoxicity potential (FAETP), the marine aquatic ecotoxicity potential (MAETP) and the terrestrial ecotoxicity potential (TETP) of 25%, 42% and 0.006%, respectively, of the original values. The CML 2000 LCIA methodology is based on the predicted no-effect concentration (PNEC) of a substance. PNEC is not value-free as political considerations are used to decide on it. Using a more robust toxicity measure as the hazardous concentration at which 50% of the species is affected (HC50) will provide value-free results. The production of standard high-grade zinc shows main contributions to six of the ten environmental impact categories. The recycling of zinc at the end of the life cycle shows beneficial effects for these same categories. Despite the reduction of the characterisation factor of Zn, the runoff emissions of Zn are still dominant. Conclusions and recommendations - To improve LCA characterisation factors for ecotoxicity in the CML 2000 methodology, it is recommended to use either the geometric mean of the effect data or the HC50. The HC50 should be based upon the EC50 values from chronic ecotoxicity tests. It is proposed to include the bioavailability of metals in LCA in three steps: (1) separate soluble fraction, (2) separate dissolved fraction and (3) separate bioavailable fraction. The issue of essentiality could not be resolved in this study. However, this could be accounted for by leaving out the fraction of the emission below the maximum permissible admissio

Has the Euro Affected the Choice of Invoicing Currency?

We present a new approach to study empirically the effect of the introduction of the euro on currency invoicing. Our approach uses a compositional multinomial logit model, in which currency choice depends on the characteristics of both the currency and the country. We use unique quarterly panel data of Norwegian imports from OECD countries for the 1996{2006 period. One of the key findings is that the eurozone countries in trade with Norway have substantially increased their share of home currency invoicing after the introduction of the euro. In addition, the euro as a vehicle currency has overtaken the role of the US dollar in Norwegian imports. The econometric analysis shows a significant effect of euro introduction above and beyond the determinants of currency invoicing (i.e., ination rate, ination volatility, foreign exchange market size, and product composition). However, the rise in producer currency invoicing by eurozone countries is primarily caused by a drop in ination volatility.euro;invoicing currency;exchange rate risk;ination;ination risk;vehicle currencies;compositional multinomial logit

Information Sharing and International Taxation

The sharing between national tax authorities of taxpayer-specific information has emerged over the last few years as a-probably "the"-central issue in the formation of international tax policy.Yet this refocusing of the debate on international taxation-away from parametric tax coordination and towards strengthening information exchange-has gone largely unnoticed in the public finance literature.This paper gives an overview of this increasingly important area of international taxation, reviewing the key economic, legal and practical concepts and issues bearing on the analysis and implementation of information exchange, and providing an account of recent policy initiatives and emerging theoretical insights.International tax evasion;tax competition;tax information exchange;tax treaties;money laundering;savings tax directive

Incentives and Information Exchange in International Taxation

The exchange of taxpayer-specific information between national tax authorities has recently emerged as a key and controversial topic in international tax policy discussions, most notably with the OECD s harmful tax practices project and the EU s savings tax initiative.This paper analyses the effects of information exchange and withholding taxes, recognizing that countries which agree to exchange information do not forfeit the ability to levy withholding taxes, and also focusing in particular on the effects of innovative revenuesharing arrangements.Amongst the findings are that: (i) the transfer of withholding tax receipts to the residence country, as planned in the EU, has no effect on equilibrium tax rates, but acts purely as a lump sum transfer; (ii) in contrast, allocating some of the revenue from information exchange to the source country counter to usual practice (though no less so than the EU agreement) would have adverse strategic effects on total revenue; (iii) nevertheless, any withholding tax regime is Pareto dominated by information exchange combined with appropriate revenue sharing; and, in particular, (iv) sharing of the additional revenues raised from information provided, while efficiency-reducing, could be in the interests of large (high-tax) countries as a means of persuading small (low-tax) countries to provide that information voluntarily.incentives;information;taxation;competition;international economics

Labor Tax Reform and Equilibrium Unemployment: A Search and Matching Approach

The paper studies simple strategies of labor tax reform in a search and matching model of the labor market featuring endogenous labor supply.Changing the composition of the tax wedge|that is, reducing a payroll tax and increasing a progressive wage tax such that the marginal tax wedge remains unaffected|increases employment, reduces the equilibrium unemployment rate, and increases public revenue as long as workers do not have all the bargaining power in wage negotiations.A strategy of replacing employment taxes by payroll taxes increases employment and reduces the equilibrium unemployment rate, while the effect on public revenue is ambiguous.labour market;taxation;unemployment;matching