This paper evaluates whether place-based tax preferences granted to Russian territories with special economic status generate measurable economic effects and whether these effects differ across institutional regimes. The study uses regional panel data for Russian regions for 2013–2024 and tax expenditure data for 2019–2025. The analysis covers special economic zones, territories of advanced socio-economic development, the Arctic zone, the Free Port of Vladivostok, and technology and industrial parks. The empirical strategy combines descriptive spatial analysis with a difference-in-differences framework. Treatment regions are defined as regions where residents of territories with special status received tax preferences, while control regions are regions without such preferences during the corresponding period. Fixed capital investment per capita and gross regional product per capita are used as outcome variables. The models include pre-treatment growth controls, robust standard errors and diagnostic tests. The results show that tax expenditures increased more than fivefold between 2019 and 2025, but the estimated effects are heterogeneous. The DID results do not confirm a stable positive aggregate effect on GRP per capita or investment. A statistically significant positive effect is found mainly for territories of advanced socio-economic development, while special economic zones show a negative investment effect. The findings suggest that tax preferences alone are not sufficient to ensure regional growth. Their effectiveness depends on institutional quality, infrastructure, regime design, administrative capacity, and the broader territorial context. The results contribute to the literature on place-based tax incentives by showing how similar instruments may produce different outcomes across regimes within one national institutional setting.
This paper investigates the relationship between the structure of value added tax (VAT) rates and public expenditure, with a particular focus on the taxation of financial services. While existing literature has extensively examined the efficiency and design of VAT systems, limited attention has been paid to how differentiated VAT rates affect the size of the public sector. Using a panel dataset of 36 developed and developing countries over the period 1960–2019, this study applies recent advances in Difference-in-Differences methodology with multiple time periods and staggered treatment adoption. The empirical strategy exploits variation in the relative taxation of financial services compared to overall tax pressure, interpreted as a proxy for deviations from a uniform VAT structure. The results indicate that applying higher effective tax rates to financial services than to the rest of the economy is associated with a statistically significant increase in public expenditure in the long run. These findings are robust to alternative specifications, inclusion of temporal lags, and controls for economic and structural characteristics. The paper contributes to the literature by providing new cross-country evidence on the fiscal consequences of VAT rate differentiation. It also proposes a behavioral mechanism based on fiscal illusion, suggesting that complex and non-uniform tax structures reduce tax transparency and may lead to higher government spending. From a policy perspective, the results support reforms aimed at simplifying VAT systems and moving toward more uniform tax rates across sectors. Such reforms may improve fiscal transparency and contribute to more sustainable public finances.
Foreign direct investments (FDI) are considered to be catalyst for fast tracking economic growth and broadening tax base. Governments are engaging policies, tax reforms and incentives to attract FDIs due to the assertion that they have great advantages to the host country. Despite the big number of FDI inflows in developing countries particularly in Tanzania; it is unclear to what extent FDI inflows contribute tax revenue especially in the presence of the numerous tax reforms and incentives. This study investigates the contribution of FDI as a determinant of corporate tax revenue in emerging economies, while inflation and per capita income were used as control variables to isolate the independent effect of FDI. Using Auto-Regressive Distributed Lag Model, the study analyzes data from Tanzania over the period of 26 years from 1999 to 2024. The results reveal that in the long-run, FDI has a positive and statistically significant effect on the corporate tax revenue (coefficient = 0.514, p = 0.037) for the period under consideration. However, during short-run, there are negative and significant coefficients for lagged changes in FDI suggesting that FDI may initially suppress corporate tax revenues and shrink the tax base. This study provides implications that while FDI enjoy tax incentives, it may result in unhealthy competition in the economy and jeopardize domestic tax revenue collections. These call for development and implementation of effective policies, strategies and regulatory frameworks to tap full potential of FDI without jeopardizing revenue mobilization. The policies should attract quality and long-term FDIs to ensure alignment with domestic revenue mobilization goals. The tax administration should be strengthened including monitoring mechanisms of tax incentives offered to FDI to protect domestic revenue base.
This study examines how the expansion of the digital economy reshapes tax equity between developed and developing countries within the framework of international taxation. While existing research has largely focused on digitalization and tax policy reforms separately, limited empirical attention has been paid to their dynamic interaction and distributional consequences across countries at different levels of development. Addressing this gap, the paper develops a comparative empirical analysis based on a Panel Vector Autoregression (PVAR) model applied to a balanced panel of 20 countries (10 developed and 10 developing) over the period 2000–2023. The analysis incorporates tax revenue (% of GDP) and the Gini index as proxies for fiscal capacity and distributive equity, as well as indicators of digitalization, including internet usage and fixed broadband subscriptions. The results reveal that digitalization exerts heterogeneous and predominantly short-run effects on tax performance and income inequality. In developed economies, digital infrastructure contributes to improved tax revenue mobilization and gradual reduction of inequality, reflecting stronger institutional capacity and regulatory effectiveness. In contrast, in developing countries, increased internet penetration is associated with greater tax volatility and widening disparities, highlighting structural constraints in taxing digital activities and enforcing compliance. The findings further demonstrate the absence of a stable long-run relationship among the variables, emphasizing the importance of short-term dynamics and institutional conditions. By integrating digitalization into the analysis of tax equity, the study contributes to the literature by providing novel empirical evidence on the asymmetric fiscal effects of the digital transition. The results underscore the need for coordinated international tax policies and strengthened domestic institutions to ensure a more equitable distribution of tax revenues in the digital era.
This study examines the vital fiscal relationship between government tax revenue and public capital expenditure in 34 Sub-Saharan African economies from 2005 to 2023, filling several important gaps in the current literature. This research recognizes the structural diversity of Sub-Saharan Africa by categorizing countries into low-income resource abundant, low-income agrarian, lower-middle-income, and upper-middle-income tiers, in contrast to traditional studies that regard Sub-Saharan Africa as a singular economic entity. The study moves the field forward by using a bootstrap panel Granger causality approach, which takes into account cross-sectional dependence and country-specific heterogeneity – things that standard linear models often miss because they use asymptotic distributions that aren’t good for the structural volatility of African markets. Furthermore, the analysis closes a compositional gap by isolating capital expenditure (such as power plants and roads) from total expenditure. This distinction is vital in the context of the post-2023 “funding squeeze”, as it clarifies whether tax mobilization is successfully creating long-term assets or is simply being absorbed by debt servicing and current expenses. The empirical findings reveal a complex, heterogeneous landscape: while many income groups exhibit fiscal synchronization – characterized by bidirectional causality between revenue and capital spending – low-income, resource-rich nations display varied patterns including tax-spend, spend-tax, and fiscal neutrality. These results indicate that a “one-size-fits-all” fiscal strategy is insufficient. In order to ensure sustainable infrastructure financing, the study offers a more detailed roadmap for 2026, recommending that nations in the synchronization and tax-spend categories concentrate on growing their tax bases, while those exhibiting neutral or spend-tax patterns should undertake structural reforms to stop tax revenue from leaking into unproductive expenses.
Remittances represent a major source of external finance for developing economies, yet their contribution to domestic tax revenue remains theoretically ambiguous and empirically inconclusive. This study examines whether remittance inflows increase tax revenue in African countries and whether this relationship depends on the level of financial inclusion. Using panel data for ten major remittance-receiving African economies over the period 2004–2024, the paper employs a panel Autoregressive Distributed Lag (ARDL) model to estimate both short-run and long-run effects. To capture conditional dynamics, the analysis incorporates an interaction term between remittances and financial inclusion, allowing the effect of remittances on tax revenue to vary with the degree of financial system development. Additional controls include economic growth, trade openness, and corruption control. The results indicate that remittances have a positive and statistically significant impact on tax revenue in both the short and long run. Financial inclusion independently enhances tax revenue performance and plays a reinforcing role by strengthening the positive effect of remittances. The interaction term is positive and significant, suggesting that remittances contribute more effectively to tax revenue when financial systems facilitate the formalization of economic activity. This finding supports the view that the fiscal benefits of remittances operate primarily through consumption and formalization channels rather than through direct taxation. The study contributes to the literature by demonstrating that the remittance-tax revenue relationship is conditional rather than universal. It highlights the importance of financial inclusion as a structural mechanism that transforms external inflows into taxable economic activity. The findings imply that policies aimed at expanding financial access and promoting formal remittance channels can enhance domestic resource mobilization in African economies.
This paper investigates the political economy of tax reform in Africa over the period 1980–2025, addressing the persistent gap between reform efforts and revenue outcomes across the continent. Despite decades of policy initiatives, tax-to-GDP ratios remain low and uneven, reflecting structural constraints, administrative weaknesses, and political challenges. The study aims to explain why some tax reforms lead to sustained improvements in revenue mobilization and institutional capacity, while others produce limited or short-lived effects. Using a panel dataset covering 30 African countries, the paper employs fixed-effects estimation, dynamic specifications, and logistic regression to analyze both the determinants of tax performance and the conditions under which reforms are initiated. The analysis incorporates economic, administrative, political, and external variables, including GDP per capita, commodity dependence, administrative capacity, digitalization, elite fragmentation, and donor conditionality. The results show that administrative capacity is the most robust determinant of tax revenue performance, while commodity dependence significantly constrains domestic resource mobilization. Importantly, the findings reveal nonlinear and conditional effects: the impact of digitalization and donor-supported reforms becomes positive only when administrative capacity exceeds a critical threshold. In the short run, reforms may generate limited or even negative revenue effects, reflect adjustment costs and political resistance, but yield gains over longer horizons. Political factors appear to influence reform sustainability indirectly rather than through immediate fiscal outcomes. The paper contributes to the literature by integrating political economy and institutional perspectives within a unified empirical framework and by highlighting the importance of reforming sequencing and capacity thresholds. Policy implications emphasize prioritizing administrative strengthening, aligning donor interventions with domestic capabilities, and embedding digital reforms within broader institutional development strategies.
The relationship between labor taxation and productivity remains contentious in economic development research. While conventional views often predict a uniformly negative effect of labor taxes on productivity, this study revisits the debate by explicitly integrating labor market rigidities. In particular, we highlight how “layoff costs” interact with the labor “tax wedge” to reshape firms’ factor allocation and innovation incentives over time. We incorporate layoff costs and the tax wedge into an augmented Cobb–Douglas production framework with technological progress and construct a partial-equilibrium model to derive testable predictions on Total Factor Productivity (TFP). To evaluate these predictions empirically, we employ multiple estimators – OLS for baseline estimates, System GMM to address dynamic endogeneity, and 2SLS for additional identification – using firm-level panel data for China covering the period 2006–2018. The theoretical model yields a non-linear mechanism in which the tax wedge exerts a dynamic U-shaped effect on TFP. When the tax wedge is smaller than a firm’s layoff costs, a crowding-out effect dominates: higher labor taxation compresses profits without inducing structural adjustment, leading firms to passively cut R&D spending and capital input, thereby slowing TFP growth. Once the tax wedge exceeds the layoff-cost threshold, a pressure-upgrading effect emerges. Firms facing prohibitively high labor costs substitute labor with capital and accelerate technological upgrading to survive, increasing capital intensity and innovation investment and ultimately improving TFP. Empirical evidence robustly supports this U-shaped relationship across OLS, System GMM, and 2SLS specifications. Heterogeneity analyses indicate that the pressure-upgrading effect is context-dependent and more pronounced in regions with lower labor intensity, higher marketization, and lower state ownership, where firms respond more strongly to price signals. The findings imply that tax policy design should account for labor market rigidities.
Personal income tax (PIT) reform represents a key instrument for balancing equity, efficiency, and administrative simplicity in emerging economies. In December 2025, Vietnam introduced a major PIT reform that reduced the number of tax brackets from seven to five and adjusted income thresholds to address long-standing bracket creep caused by cumulative inflation. This paper provides a quantitative evaluation of the reform using a simulation-based approach grounded in representative taxpayer methodology. Eight income profiles reflecting Vietnam’s formal sector wage distribution are used to compare tax liabilities under the pre-reform and post-reform schedules. The analysis is guided by the equity – efficiency – simplicity framework and insights from optimal income taxation theory. Results indicate that the reform generates asymmetric but broadly progressive outcomes. Middle-income taxpayers experience the largest relative reductions in tax burdens, ranging from 20% to 42.5%, while low-income groups benefit from threshold adjustments that partially offset inflationary effects. Despite these reductions, vertical equity is preserved, as average tax rates continue to increase monotonically with income. The reform also smooths the effective marginal tax rate structure, potentially reducing distortionary incentives associated with bracket discontinuities. From a fiscal perspective, the reform is associated with a short-term decline in PIT revenues, estimated at 0.23–0.30% of GDP under static assumptions. However, this impact may be partially mitigated through improved compliance and tax administration. Compared to similar reforms in Asia, Vietnam’s approach represents a moderate and targeted adjustment that prioritizes middle-income relief while maintaining a relatively high-top marginal rate. The findings contribute to the literature by demonstrating the applicability of simulation-based methods in data-constrained settings and by providing policy-relevant insights for PIT design in developing economies.
This paper evaluates the effectiveness and sustainability of excise taxation on alcohol and tobacco in a developing economy, using the Philippines as a case study. The research focuses on the dynamic impact of successive sin tax reforms implemented between 2010 and 2024, with particular attention to the 2020 reform introduced during the COVID-19 pandemic. The study applies an Autoregressive Distributed Lag (ARDL) model with a structural break specification to estimate short-run and long-run elasticities, supplemented by Fully Modified OLS (FMOLS) and Dynamic OLS (DOLS) estimators to address endogeneity related to illicit market substitution. The empirical results indicate that in the short run, demand for sin goods remains relatively inelastic (–0.44), reflecting persistent addictive behavior. However, under the combined shock of tax increases and pandemic-induced income constraints, price sensitivity temporarily increases significantly (–1.45). In the long run, corrected estimates confirm a stable, but inelastic price response (–0.25 to –0.49), suggesting that excise taxation contributes to a sustained reduction in consumption. At the same time, the findings reveal important limitations of current tax policy. High income elasticity (>1) implies that economic growth may offset the deterrent effect of excise taxes, while discrepancies between estimation methods highlight the substantial role of illicit trade in biasing observed outcomes. These results point to diminishing marginal effectiveness of repeated tax increases. The study concludes that excise tax policy should be complemented by income indexation mechanisms and stronger enforcement against illicit markets. The proposed approach enhances the long-term fiscal and public health effectiveness of sin taxation in developing economies.
Improving tax compliance among small and medium-sized enterprises remains a critical challenge for fiscal sustainability in developing economies, where administrative capacity is limited and traditional enforcement mechanisms are costly. Although behavioral interventions based on “nudge” theory have demonstrated promising results in tax compliance research, rigorous experimental evidence for business taxpayers in Sub-Saharan Africa remains scarce. This study examines the effectiveness of low-cost behavioral interventions in improving small and medium-sized enterprises tax compliance at the municipal level in Ethiopia. A randomized controlled trial was conducted in Woldia Town using a stratified random sample of 120 formally registered small and medium-sized enterprises. Firms were randomly assigned to one of four groups: a control group, a reminder intervention group, a social norm intervention group, and a combined intervention group. Tax compliance was measured as a binary outcome based on timely filing and payment using administrative tax records. Treatment effects were estimated under an intention-to-treat framework using logistic regression and average marginal effects. The results indicate that all behavioral interventions significantly improve tax compliance relative to the control group. Reminder messages produce the strongest individual effect, increasing the probability of compliance by 54 percentage points, while social norm messages increase compliance by 27 percentage points. The combined intervention yields the largest overall effect, increasing compliance probability by 68 percentage points, although the effect is not strictly additive. Firm-level characteristics and owner demographics are not statistically significant predictors of compliance, suggesting that behavioral interventions outweigh structural determinants in this context. This study contributes to the tax compliance literature by providing rare causal evidence from Sub-Saharan Africa and demonstrating that simple, scalable reminder systems constitute an effective and cost-efficient policy instrument for improving SME tax compliance in resource-constrained settings.
Environmental taxes have received considerable attention as a fundamental policy for environmental regulation and sustainable development. However, empirical evidence found the contradictory relations between environmental taxation and emissions among OECD countries. This paper is aimed to analyze whether environmental taxation moderate the net effect of the shadow economy, AI adoption, and ICT penetration on CO2 emissions in OECD countries. Limited by the availability of dataset, this paper chose 20 OECD countries and employed the fixed-effects model with clustered standard errors model and cross-sectional augmented autoregressive distributed lag model to check their relationships. Findings show that environmental taxes consistently reduce environmental emissions, underscoring their effectiveness as a policy tool for OECD economies. In contrast, the shadow economy worsens environmental performance, although its interaction with environmental taxes demonstrates that tax policy can partially offset the distortions caused by informality. AI adoption increases environmental quality, and interaction with environmental taxes further strengthens this effect, suggesting that AI can strengthen tax effectiveness. ICT shows no significant direct impact on environmental performance. However, its interaction with environmental taxes could reduce the emissions, indicating that tax outcomes vary with technological structure. This interaction indicates that ICT yields environmental benefits only when supported by strong fiscal frameworks. These results highlight that environmental taxation play a key role in reaching emission targets as a conditional policy tool rather than a universally effective instrument. Its performance depends on tax design, enforcement capacity, and the broader structural context, including informality and technological development. It contributes to the literature by offering empirical evidence on double dividend hypothesis and showing how fiscal instruments and technological progress interact with each other in reducing environmental emissions. The results imply that tax design should be aligned with country-specific and technological conditions to enhance policy effectiveness. Integrating environmental taxes with digital transformation strategies is important for mitigating environmental emissions of OECD countries.
This study investigates the welfare implications of environmental tax policies, focusing on three key welfare dimensions, i.e., climate change vulnerability, vulnerable employment, and income inequality. Using a global panel dataset comprising 92 countries from 1994 to 2020, the analysis employs the Method of Moments Quantile Regression with fixed effects (MMQR) to establish baseline results. Robustness checks are conducted using bootstrap simultaneous quantile regression and hierarchical regression methods. The empirical findings reveal that environmental taxation significantly and negatively influences all three welfare indicators, suggesting a positive association between such policies and national welfare outcomes. This implies that environmental taxation is a strategic fiscal policy tool for addressing the welfare of the global citizenry. Notably, the effects of environmental taxation exhibit fascinating tail dynamics, particularly regarding the climate change vulnerability and vulnerable employment. The results also reveal fascinating tail dynamics, particularly regarding the climate change vulnerability effects of environmental taxation. In countries with the lowest vulnerability, the effect is insignificant, whereas it is significant for those in the highest vulnerability band. In terms of vulnerable employment, while the effects of environmental taxation are significant in countries with lower vulnerable employment, they are insignificant, particularly for those in the highest band. These heterogeneous effects highlight the importance of tailoring environmental tax policies to national contexts. The results align with several Sustainable Development Goals (SDGs), including SDG 8 (Decent Work and Economic Growth), SDG 10 (Reduced Inequality), and SDG 13 (Climate Action), supporting the role of environmental taxation as a tool for sustainable development.
This study explores the nonlinear relationship between income tax rates and fiscal revenues in Spain through the lens of the Laffer Curve, which proposes that beyond a certain threshold, higher taxation can reduce government income by discouraging economic activity. The primary aim is to identify the tax rate that maximizes fiscal revenues and to analyze how major economic crises, the 2008 Global Financial Crisis, the 2012–2013 European recession, and the COVID-19 pandemic, have shaped this relationship. Using annual data from 1995 to 2022 obtained from the Spanish Tax Agency, the World Bank, and the National Statistics Institute, we calculate the effective tax rate as the ratio of total tax revenues to GDP. A cubic spline regression approach is applied, allowing for flexible estimation of the tax-revenue function across different rate intervals. The model incorporates GDP, inflation, and dummy variables for each crisis period to control for macroeconomic conditions and structural breaks. Results reveal a clear nonlinear pattern consistent with the Laffer hypothesis, with an optimal effective tax rate estimated at approximately 13%, slightly below the observed 13.94% in 2022. The inclusion of crisis indicators substantially increases model fit, indicating that fiscal stimulus and supportive policies during downturns can offset, or even reverse, negative revenue impacts. The controlled model explains over 95% of revenue variation, with GDP growth emerging as the dominant driver, while inflation shows no statistically significant effect. Findings suggest that Spain may currently operate above the revenue-maximizing threshold, implying that a moderate tax reduction could yield higher revenues, improve compliance, and reduce economic distortions. The study underscores the policy relevance of maintaining flexible, countercyclical tax frameworks that respond to changing economic conditions, thereby enhancing both fiscal sustainability and economic efficiency, particularly in economies exposed to recurrent macroeconomic shocks.
Governments progressively rely on taxes and incentives to reassure business research and development (R&D) and innovation investment. They make qualified investments that are financially gainful to firms, pouring growth but reducing governments’ direct tax intake. Taxation and incentive policies determine organizations’ capability to invest in innovation. The study investigates the effect of corporate taxes on business R&D investment for the period 2000-2022. The empirical analysis examines four Central European countries – Czech Republic, Hungary, Poland, and Slovakia – which are similar in terms of economic and technological development. The study focuses on four primary indicators influencing the decision-making underlying the business R&D expenditure process: corporate tax, tax incentives, government expenditure on R&D, and human capital accumulation. In this context, panel data and the ARDL model are used to investigate the effect of exogenous variables on the business R&D intensity of Europe. The research findings show that corporate tax has a substantial and adverse impact on the business expenditure on R&D. In contrast, tax incentives and government expenditure on R&D positively and significantly impact the business expenditure on R&D in the long run. Furthermore, all exogenous variables significantly increased the intensity of business research in the short run. The empirical results suggest that policymakers in Central Europe should develop targeted corporate tax policy that addresses innovation bottlenecks but simultaneously creates strategic incentives. More specifically, governments are expected to develop targeted tax credit mechanisms that mitigate financial barriers to R&D investment, especially for businesses.
This article examines the impact of taxes on economic growth in Russia's manufacturing sector. It argues that, given the growing role of manufacturing in national technological sovereignty, there is a pressing need for clearer insight into how taxes influence its development in the current context. The analysis covers the period from the early 2000s, when Russia recovered from the 1998 financial crisis, to the present, using statistical analysis based on linear and linearizable models. The research hypothesizes that statistical analysis at the international, national, and regional levels can reveal a negative effect of higher taxes on manufacturing growth. The findings largely confirm this hypothesis. At the international level, an analysis of the overall tax burden, measured as tax revenue as a percentage of GDP, showed no decisive effect on manufacturing performance. However, the picture changes when the analysis focuses specifically on taxes that directly reduce enterprise income such as the corporate income tax and social insurance contributions. Regression analysis of Russia's manufacturing sector, and of individual regions with comparable economic potential and industrial specialization, shows that increases in these taxes over the given period negatively affected output and value added. However, the impact was not direct, but indirect, through a reduction in the investment resources of enterprises. Given the rising tax burden on corporate income in Russia, these findings suggest potential harm to manufacturing development and increased national risks. To mitigate these risks under successful budget consolidation, the study recommends lowering the corporate income tax rate to an internationally competitive level or replacing this tax with an alternative that is better suited to the modern digital economy.
China's environmental tax policy is becoming an important tool for urban areas to promote optimal resource allocation and green technology innovation. This study is based on data from 288 Chinese cities from 2014 to 2022. Uses the Super-SBM model to calculate the Green Total Factor Productivity (GTFP) and combines the two-way fixed effect difference-in-differences model to evaluate the implementation effect of the Environmental Protection Tax Policy (EPTP) on GTFP. The main findings are as follows: (1) The EPT significantly promotes the improvement of GTFP (elasticity coefficient 2.87%), verifying the applicability of the Environmental Kuznets Curve and Porter Hypothesis at the city level in China. The economic growth rate has a positive impact on GTFP (for every 1 unit increase in GDP, GTFP increases by 0.6%), while the urban population size has an inhibitory effect. (2) The EPTP shows a significant negative impact in the eastern developed regions, the bay area urban agglomerations, and cities with high administrative levels, reflecting the regulatory role of EPTP on regional development balance. (3) The EPTP drives the growth of GTFP through green technological innovation and industrial structure upgrading, with the effect of industrial upgrading being more significant. The mechanism analysis reveals that the optimal allocation of resources is the key to the effectiveness of the EPTP. It is suggested to avoid a one-size-fitsall policy, strengthen the fiscal compensation mechanism in the eastern region, enhance innovation support through technological subsidies, and optimize the path of industrial upgrading. This study provides a basis for the design and implementation of China's differentiated tax policy, enriching the theoretical background.
Tax incentives are commonly used by governments due to their lower risk of causing tax distortion and rent-seeking behaviour compared to direct fiscal spending. Therefore, the tax burden and its impact on enterprise performance have long been subjects of research. This study employs panel data regression to analyse the effect of the tax burden on the performance of small and medium enterprises (SMEs). It considers the overall tax burden – including both direct and indirect taxes – rather than focusing solely on corporate income tax. Using empirical analysis based on annual data from 88,692 enterprises operating continuously in Vietnam from 2011 to 2020, the results indicate that reducing the tax burden can enhance SME performance. The study also finds that tax incentives have a more positive effect on SMEs in poorer regions compared to those in major cities. The findings reveal that reducing the tax burden is less effective for SMEs in the manufacturing sector but yields stronger positive impacts in the construction and trade sectors. Enterprise performance is also shaped by the quality of local public governance. Lowering market entry costs through more efficient local public administration can enhance SMEs’ operational efficiency. The study recommends that the government continue to implement preferential tax policies for SMEs, including lower tax rates, deductions and benefits. To support the development of key industries particularly manufacturing tailored corporate income tax incentives should be introduced. Furthermore, specific tax mechanisms should be developed for SMEs operating in especially disadvantaged regions.
This study investigates the welfare implications of environmental tax policies, focusing on three key welfare dimensions, i.e., climate change vulnerability, vulnerable employment, and income inequality. Using a global panel dataset comprising 92 countries from 1994 to 2020, the analysis employs the Method of Moments Quantile Regression with fixed effects (MMQR) to establish baseline results. Robustness checks are conducted using bootstrap simultaneous quantile regression and hierarchical regression methods. The empirical findings reveal that environmental taxation significantly and negatively influences all three welfare indicators, suggesting a positive association between such policies and national welfare outcomes. This implies that environmental taxation is a strategic fiscal policy tool for addressing the welfare of the global citizenry. Notably, the effects of environmental taxation exhibit fascinating tail dynamics, particularly regarding the climate change vulnerability and vulnerable employment. The results also reveal fascinating tail dynamics, particularly regarding the climate change vulnerability effects of environmental taxation. In countries with the lowest vulnerability, the effect is insignificant, whereas it is significant for those in the highest vulnerability band. In terms of vulnerable employment, while the effects of environmental taxation are significant in countries with lower vulnerable employment, they are insignificant, particularly for those in the highest band. These heterogeneous effects highlight the importance of tailoring environmental tax policies to national contexts. The results align with several Sustainable Development Goals (SDGs), including SDG 8 (Decent Work and Economic Growth), SDG 10 (Reduced Inequality), and SDG 13 (Climate Action), supporting the role of environmental taxation as a tool for sustainable development.
This study investigates the relationship between aggressive tax planning and audit committee features in Pakistani companies listed on the KSE 100 index from 2016 to 2021. It explores how audit committee characteristics – size, independence, financial expertise, diligence, and gender diversity – impact corporate tax practices. Using a sample of KSE 100 firms, a quantitative analysis was conducted to examine the effects of audit committee features on aggressive tax strategies. Control variables such as firm size, leverage, and tax loss carryforwards were included to provide a comprehensive view of the factors influencing corporate tax behavior. The results show that larger audit committees are linked to more aggressive tax planning, likely due to the complexity and diversity of opinions that encourage risk-taking. Conversely, audit committees with members possessing financial expertise significantly reduce aggressive tax practices. Independence within audit committees also plays a critical role in curbing tax aggressiveness, as independent members act in the best interest of shareholders. Gender diversity, while not directly affecting tax aggressiveness, remains important for promoting well-rounded decision-making processes. The findings emphasize the importance of having independent and financially knowledgeable audit committee members to reduce tax risks and improve governance. For policymakers in emerging markets, strengthening audit committee governance is key to promoting sustainable business growth. This study contributes to the existing literature by providing evidence from an emerging market, Pakistan, where corporate governance mechanisms and tax planning strategies are critical yet understudied. It offers valuable insights for improving audit committee effectiveness in managing tax risks.
