Taxes and Financial Reporting: Evidence from Discretionary Investment Write-Offs in Italy

This paper provides further empirical evidence on the relationship between taxes and financial reporting by focusing on accounting decisions to write-offs equity investments. The analysis is based on panel data for Italian companies. In the period 1998-2006 the Italian corporate income tax has been reformed several times. In particular the tax deductibility of write-offs of equity investment was repealed in 2004. The paper exploits the ensuing high cross-sectional and times series variation in the marginal tax rate to identify tax effects. The econometric analysis delivers strong evidence that taxes affect the probability of write-offs. In contrast there is no evidence that taxes affect the magnitude of the write-offs. The paper also tests for the existence of a trade-off between tax minimization and non tax costs such as financial reporting costs and agency costs. Surprisingly, the evidence of such trade-off is rather weak.corporate taxation, write-offs of equity investments, financial reporting, tax planning

Write-off of participations: a way to minimize the fiscal expenses

EnThe main purpose of this paper is to analyze the interaction of financial reporting and tax factors, with the aim of implementing an econometric analysis of the effects of the 2004 Italian reform of the fiscal regime on the write-off of participations

Taxes and financial reporting: Evidence from discretionary investment write-offs in Italy

This paper provides further empirical evidence on the relationship between taxes and financial reporting by focusing on accounting decisions to write-offs equity investments. The analysis is based on panel data for Italian companies. In the period 1998-2006 the Italian corporate income tax has been reformed several times. In particular the tax deductibility of write-offs of equity investment was repealed in 2004. The paper exploits the ensuing high cross-sectional and times series variation in the marginal tax rate to identify tax effects. The econometric analysis delivers strong evidence that taxes affect the probability of write-offs. In contrast there is no evidence that taxes affect the magnitude of the write-offs. The paper also tests for the existence of a trade-off between tax minimization and non tax costs such as financial reporting costs and agency costs. Surprisingly, the evidence of such trade-off is rather weak

The Effect of Fiscal Incentives on Business R&D

This paper analyses the determinants of business R&D choices. In particular, it provides new empirical evidence on the effectiveness of fiscal policies aimed at driving companies to invest in R&D activity. By computing two very accurate proxies for firm-specific tax savings achievable when investing in R&D, and by exploiting exogenous changes in fiscal legislation in Italy, this study investigates if fiscal considerations affect companies’ choice to invest in R&D and how much to spend in such activity. The empirical analysis is based on an unbalanced panel data set composed of 163 Italian companies, covering the years 2004-2010. A two-step approach has been implemented, by combining a probit and a tobit estimation model. The results deliver strong empirical evidence that fiscal incentives significantly affect business R&D choices, by one side, increasing companies’ likelihood to invest in R&D, and, by the other, fostering companies’ R&D expenditure

The Effect of Fiscal Incentives on Business R&D

This paper analyses the determinants of business R&D choices. In particular, it provides new empirical evidence on the effectiveness of fiscal policies aimed at driving companies to invest in R&D activity. By computing two very accurate proxies for firm-specific tax savings achievable when investing in R&D, and by exploiting exogenous changes in fiscal legislation in Italy, this study investigates if fiscal considerations affect companies’ choice to invest in R&D and how much to spend in such activity. The empirical analysis is based on an unbalanced panel data set composed of 163 Italian companies, covering the years 2004-2010. A two-step approach has been implemented, by combining a probit and a tobit estimation model. The results deliver strong empirical evidence that fiscal incentives significantly affect business R&D choices, by one side, increasing companies’ likelihood to invest in R&D, and, by the other, fostering companies’ R&D expenditure

Fiscal Reforms during Fiscal Consolidation: The Case of Italy

In this paper we aim to discuss the strengths and weaknesses of the fiscal consolidation package adopted recently by the Italian Government in order to achieve a balanced budget by 2013. Revenues are forecasted to increase by more than 3.3 GDP percentage points; these stem mostly from indirect and property taxation. The analysis of the Italian case is interesting since it seems to be consistent with a recent strand of the literature which, in order to foster both short and long-term economic growth, advocated a shift of the tax burden from capital and labour income to consumption and property. Through a set of micro simulation models, this paper evaluates the effects of the Italian fiscal package on households and firms. We show that, in respect of households’ income, indirect and property tax reforms are highly regressive, whilst the reform makes limited resources available for growth enhancing policies (reduction in the effective corporate tax burden). Then, we propose an alternative fiscal package. We show that a less regressive reform on households can be obtained by shifting taxation from personal and corporate income tax to indirect taxation. Our proposal allows the tax burden on firms to be reduced substantially and, in the meantime, offers lower personal income tax rates on households in the lowest deciles of income distribution since they are penalized most by the increase in indirect taxation.tax reforms, fiscal consolidation, micro simulation models, Italy

Fiscal Reforms during Fiscal Consolidation: The Case of Italy

In this paper we aim to discuss the strengths and weaknesses of the fiscal consolidation package adopted recently by the Italian Government in order to achieve a balanced budget by 2013. Revenues are forecasted to increase by more than 3.3 GDP percentage points; these stem mostly from indirect and property taxation. The analysis of the Italian case is interesting since it seems to be consistent with a recent strand of the literature which, in order to foster both short and long-term economic growth, advocated a shift of the tax burden from capital and labour income to consumption and property. Through a set of micro simulation models, this paper evaluates the effects of the Italian fiscal package on households and firms. We show that, in respect of households’ income, indirect and property tax reforms are highly regressive, whilst the reform makes limited resources available for growth enhancing policies (reduction in the effective corporate tax burden). Then, we propose an alternative fiscal package. We show that a less regressive reform on households can be obtained by shifting taxation from personal and corporate income tax to indirect taxation. Our proposal allows the tax burden on firms to be reduced substantially and, in the meantime, offers lower personal income tax rates on households in the lowest deciles of income distribution since they are penalized most by the increase in indirect taxation.Tax reforms, Fiscal consolidation, Micro simulation models, Italy

Microcystin Contamination in Sea Mussel Farms from the Italian Southern Adriatic Coast following Cyanobacterial Blooms in an Artificial Reservoir

An experimental study was performed in 2009-2010 to investigate the polluting effect of eutrophic inland waters communicating with the sea coast. The study was planned after a heavy and long-lasting Planktothrix rubescens bloom occurred in the Lake Occhito, an artificial reservoir. The waters of the reservoir flow into the southern Adriatic Sea, near several marine breeding of Mytilus galloprovincialis mussels, a typical seafood from the Apulia region (Southern Italy). A monitoring study of water and mussels from the sea coast of northern Apulia region and on the Occhito reservoir was carried out over twelve months, to get more information regarding the contamination by cyanobacteria and related cyanotoxins. Elisa immunoassay analyses estimated total microcystin amounts from 1.73 to 256 ng/g in mussels, up to 0.61 μg/L in sea water and up to 298.7 μg/L in lake water. Analyses of some samples of free-living marine clams as well as of marine and freshwater fish proved microcystin contamination. Selective confirmatory analyses by LC/ESI-Q-ToF-MS/MS on some mussel samples identified the microcystin desMe-MC-RR as the major toxin; this compound has been reported in the literature as a specific marker toxin of Planktothrix rubescens blooms. Our study describes for the first time the direct relationship between environmental pollution and food safety, caused by seafood contamination from freshwater toxic blooms

Microcystin Contamination in Sea Mussel Farms from the Italian Southern Adriatic Coast following Cyanobacterial Blooms in an Artificial Reservoir

An experimental study was performed in 2009-2010 to investigate the polluting effect of eutrophic inland waters communicating with the sea coast. The study was planned after a heavy and long-lastingPlanktothrix rubescensbloom occurred in the Lake Occhito, an artificial reservoir. The waters of the reservoir flow into the southern Adriatic Sea, near several marine breeding ofMytilus galloprovincialismussels, a typical seafood from the Apulia region (Southern Italy). A monitoring study of water and mussels from the sea coast of northern Apulia region and on the Occhito reservoir was carried out over twelve months, to get more information regarding the contamination by cyanobacteria and related cyanotoxins. Elisa immunoassay analyses estimated total microcystin amounts from 1.73 to 256 ng/g in mussels, up to 0.61 μg/L in sea water and up to 298.7 μg/L in lake water. Analyses of some samples of free-living marine clams as well as of marine and freshwater fish proved microcystin contamination. Selective confirmatory analyses by LC/ESI-Q-ToF-MS/MS on some mussel samples identified the microcystin desMe-MC-RR as the major toxin; this compound has been reported in the literature as a specific marker toxin ofPlanktothrix rubescensblooms. Our study describes for the first time the direct relationship between environmental pollution and food safety, caused by seafood contamination from freshwater toxic blooms

Fiscal decentralization and efficiency: empirical evidence from Italian municipalities

This paper investigates the association between fiscal decentralization and municipality efficiency by conducting an empirical analysis focused on the Italian context. We conduct a cost efficiency analysis based on a stochastic frontier approach with municipality and time fixed effects for 2010-2016 modelling the decentralization effect with a continuous variable, taxation autonomy, which allows for accounting for the degree and evolution of fiscal decentralization over time. The empirical analysis provides convincing evidence that fiscal decentralization is positively associated with municipalities' efficiency, robust to inclusion into the model of a large set of control variables. This evidence lends support for policies aimed at making more closely aligned expenditure and revenue decision making