The experience of some OECD economies on tax smoothing

Jayawickrama, Ananda; Abeysinghe, Tilak

doi:10.1080/00036846.2012.663472

Cited by 4 publications

(3 citation statements)

References 27 publications

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“…They argue that for tax smoothing to hold, future tax rates should cointegrate with the permanent expenditure rate even when the tax rate and expenditure rate follow random walk. Jayawickrama and Abeysinghe (2013) propose the concept of weak and strong evidence of the tax smoothing hypothesis depending on the degree of cointegration between the tax rate and the permanent expenditure rate. Using annual data spanning from 1954 to 2004 for Australia, Canada, Italy, Holland, the United Kingdom and the United States, they found evidence that tax smoothing holds for all these countries.…”

Section: Theorotical Framework and Literature Reviewmentioning

confidence: 99%

Fiscal Policy and Optimal Taxation in Sierra Leone: Testing for Tax Smoothing Hypothesis

Bonzu¹

2022

IJEF

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This paper empirically investigate whether the budget imbalances in Sierra Leone over the review period is consistent with optimal tax policy. The procedure involves testing if tax smoothing hypothesis hold for Sierra Leone. In this regard, three different empirical approaches were performed. Firstly, I examine the random walk property of the tax rate. The null hypothesis of non-stationarity of tax rate could not be rejected, which implies the tax rate follows random walk. Second, I examined whether changes in tax rate is predictable by regressing changes in tax rate by its own lagged values. The result shows that tax rate is unpredictable, as changes in tax cannot be determined by its lagged values. Finally, a VAR model was employed to examine whether tax rate can be predicted by its own lagged values together with changes in the government spending rate and the growth rate of real GDP. The results indicate that all the variables employed were found not be significant is predicating the tax rate. Overall, all the empirical estimations support the existence of tax smoothing over the sample period and that the budget inbalances over the review period is consistent with optimal tax policy.

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Section: Theorotical Framework and Literature Reviewmentioning

confidence: 99%

Fiscal Policy and Optimal Taxation in Sierra Leone: Testing for Tax Smoothing Hypothesis

Bonzu¹

2022

IJEF

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“…Existing studies have focused on the impact of fiscal spending on fiscal soundness [55,64]. It is not only welfare expenditures that affect national finances, but also the government's fiscal capacity for welfare expenditures, which will be limited if finances are not sufficient in the long term.…”

Section: Methods Of Analysismentioning

confidence: 99%

“…In the previous study, total public spending and total tax burden level were mostly considered, focusing on identifying whether spending cutoff strategies and tax expansion strategies are more effective to ensure fiscal sustainability [56,64]. It is true that those were difficult to suggest specific policy measures to enhance the fiscal sustainability of the welfare state.…”

Section: Determinants Of Fiscal Sustainability Of Welfare Statesmentioning

confidence: 99%

How Does a Welfare State achieves Fiscal Sustainability? A Study of the Impact of Tax Equity

Ko¹

2018

Taxes and Taxation Trends

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This study seeks to identify institutional characteristics of financially sustainable welfare states that focus on tax structure. Using data collected from 17 OECD countries from 1986 to 2013, this study investigates the characteristics of fiscal sustainability of each welfare state. The model of simultaneous equations (three-step least-squares method) is used for treating simultaneousness between fiscal sustainability and welfare expenditures. As a result, increasing the level of tax burden generally has a positive effect on the fiscal sustainability of the welfare state. However, the most important point that should be considered is the manner of raising tax revenue that affects the sustainability of economic, political, and social dimensions for securing fiscal sustainability. Specifically, it is necessary to raise the equity between the sources of taxation in accordance with the ability to pay principle. Improving vertical equity can also make a positive contribution to the fiscal sustainability in order to secure the political legitimacy of the tax and mitigate the regressive burden, which may result from the expansion of a consumption tax. Finally, it is beneficial to fiscal sustainability of the welfare state to diversify the financial base by combining the ability to pay principle and the benefit principle.

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The determinants of Fiscal Sustainability of Welfare State

Hyejin¹

2016

koreanjournalofsocialwelfarestudies

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The experience of some OECD economies on tax smoothing

Cited by 4 publications

References 27 publications

Fiscal Policy and Optimal Taxation in Sierra Leone: Testing for Tax Smoothing Hypothesis

Fiscal Policy and Optimal Taxation in Sierra Leone: Testing for Tax Smoothing Hypothesis

How Does a Welfare State achieves Fiscal Sustainability? A Study of the Impact of Tax Equity

The determinants of Fiscal Sustainability of Welfare State

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