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would be similar to the traditional concept of tax expenditures, that is, a tax and a consequent subsidy not computed or not registered affecting to the same sector.

Case 7: Agricultural Sector production sold partially abroad, with infinite-price- elasticity of external demand, domestic demand with normal negative slope (negative price-elasticity), levied by Tax on Exports and VAT (with rebate of VAT for exports)

VAT exc [1a]

IC [2]

VA [3]

VAT) [4]

Liability F. Credit T (Net)

[5]

[6]

[7]

95

32+6

63

6

10

6

4+1

185

95

90

9

19

10

9

212

185

27

3

21

19

2

180

18

50

35

16

VAT Net of Rebate Tax Burden Net VAT Tax on Exports (= 260x0,30x0,10)

11 (= 16 - 5) 6,1% (=11/180) 8

Total impact of Tax on Exports30 [260 x 0,10]

26

Note: decimals are omitted except in TB; little differences are due to calculus simplifications.

TB [8]

8%

10%

7%

Final Result – Alternatives estimations

Notes:

Extended estimation = VAT + Tax on Production = 6,1% + 14,4% = 20,5% Usual estimation = Tax on Exports (without VAT) = 4% Restricted estimation 1 = Tax on Production (without VAT) = 14,4% Restricted estimation 2 = VAT + Tax on Exports = 6,1% + 4,4% = 10,5%

  • Net VAT with “saldo técnico” included (column [7])

  • VAT Rebate for Exports [15 x 0,30] without “saldo técnico”

16

  • -

    5

TB 1 T B 2 ( U s u a l e s t i m a t i o n ) T B (Extended estimation) 3 ( R e s t r i c t e d e s t i m a t i o n 1 ) = 2 6 / 1 8 0 = 1 4 , 4 % T B 4 ( R e s t r i c t e d e s t i m a t i o n 2 ) = 1 9 / 1 8 0 = 1 0 , 5 % = 8/180 = = 37/180 = 20,5 % 4,4 %

STAGE

STAGE I: Land labors STAGE II: Harvest labors and STAGE III: Trading

106

205

234

  • Result 1

(VAT + Total impact of Tax on Exports)

  • Result 2 (Tax on Exports)

37

8

  • Result 3 (Total impact of Tax on Exports)

  • Result 4 (VAT + Tax on Exports)

26 19

VAT inc [1a]

AGRICULTURAL SECTOR (CORN AND MEAT)

PV

T (Addition

Invoice System

5) Final remarks

This note explains formal and practical concepts dealing with the measurement methodology of sector tax burden, with especial reference to the cases of VAT and Tax on Exports in the Agricultural Sector. The election of VAT in examining the estimation of sector tax burden has indeed a particular reason. It is a tax usually excluded in the estimation of the STB. The argument suggested for that exclusion is the particularity of the

30

Implicit value of the “tax on production” due to Tax on Exports.

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