Economics Seminar 3

Seminar 3

policy briefconsumption taxes: the way of the future

1. Introduction:

* Government more and more interested in taxes on consumption to finance a large share of public spending

* Reasons:

(1). Increased international tax competition>>联想：可能是公司都找到税收最低的国家创立空壳公司来合理避税>>different to collect income taxes>choose consumption to be the main source of revenue.

(2). Move from tax on income to tax on consumption

>>improve economic efficiency

>>increase the rate of growth

>>improve competitiveness

>>protect employment

以上两项放到了political上

(1). Germany:

increase VTA rate >>to finance a cut in social security contributions.

(2). France:

A proposal to increase VAT & reduce employers’ social security contributions

Increase VTA 的问题

(1). Increase the inequity

(2). Lower the living standards of the poor

balance: between economic efficiency and income inequality.

2. 啥是taxes on consumption

how to choose the balance between direct tax and indirect tax

Question: why social security contributions can be even regressive (taking a higher proportion of lwer incomers.)

3. what are the trends in the OECD?

(1). 观察VAT在1965-1975年之间在OECD的变化

average: decrease

this change balanced by the increase of tax on income<<strong increase in the share of social security contributions.

(2). The role VAT played in the development of consumption tax over the past 40 years.

Figure 2: Revenue from general consumption taxes (and VAT in particular) has grown faster across the OECD as a whole that all taxes on consumption.

Continuing increase in VAT vs historically downward trend in taxes on consumption.

4. Does the taxes on consumption promote growth?

Question: taxes on income & taxes on consumption, which is better for growth?

(1)我的观点： we should focus on not only the specific rate, but the different level of revenue which means, whether it is aggressive or regressive.

(2)多数人认为是taxes on...