Tax Expenditures: The Extent of Corporate Tax Breaks in the Czech Republic
| Název práce v češtině: | Náklady konfliktu - empirická analýza ekonomické situace v Palestině a Izraeli |
|---|---|
| Název v anglickém jazyce: | Tax Expenditures: The Extent of Corporate Tax Breaks in the Czech Republic |
| Akademický rok vypsání: | 2012/2013 |
| Typ práce: | bakalářská práce |
| Jazyk práce: | angličtina |
| Ústav: | Institut ekonomických studií (23-IES) |
| Vedoucí / školitel: | doc. Petr Janský, M.Sc., Ph.D. |
| Řešitel: | skrytý - zadáno vedoucím/školitelem |
| Datum přihlášení: | 04.06.2014 |
| Datum zadání: | 04.06.2014 |
| Datum a čas obhajoby: | 08.09.2015 00:00 |
| Místo konání obhajoby: | IES |
| Datum odevzdání elektronické podoby: | 03.08.2015 |
| Datum proběhlé obhajoby: | 08.09.2015 |
| Oponenti: | PhDr. Hana Hejlová, Ph.D. |
| Kontrola URKUND: | |
| Zásady pro vypracování |
| Corporate tax breaks is an important topic since it has an impact not only on corporations
themselves but also on the average citizens and overall economy of the country. Germany and the United States are the first countries that started to report tax expenditure information, in the late 1960s. Today, tax expenditure reports are a legal requirement in most of OECD countries. However, Czech Republic is obliged to publish an analysis of tax breaks only from 2014 (required by paragraph 2 of Article 14 Chapter VI of Council Directive No 2011/85/ EU). Therefore, the amount of studies of Czech Republic tax expenditure is limited. In 2010 this topic was well explored and explained by Martin Jareš (Daňové úlevy v České republice) basing on the tax breaks from 2008. The purpose of this paper is to estimate corporate tax breaks of the recent years and analyze the results. The analysis will consist of reasons for providing tax breaks and it’s impact on tax revenue. |
| Seznam odborné literatury |
| 1. ALTSHULER, R.; R. D. DIETZ. Reconsidering Tax Expenditure Estimation. National
Tax Journal. 2011, vol. 64, issue 2, p. 459–490 2. AUSTRALIA, DEPARTMENT OF TREASURY (January 2014). Tax Expenditures Statement 2013. Department of Treasury. 3. BRATIĆ, V. (2012). (In)efficiency of corporate income tax expenditures on underdeveloped areas of special tax treatment in Croatia. Financial Theory and Practice. 2012, vol. 36, issue 4, p. 373-394. 4. BURMAN, L.; PHAUP, M. Tax Expenditures, the Size and Efficiency of Government, and Implications for Budget Reform. Tax Policy and the Economy. 2012 Vol. 26, issue 1, pp. 93-124. 5. CAIUMI, A. (2011), The Evaluation of the Effectiveness of Tax Expenditures - A Novel Approach: An Application to the Regional Tax Incentives for Business Investments in Italy, OECD Taxation Working Papers, No. 5, OECD Publishing. 6. FEREDE, E.; DAHLBY, B. The Impact of Tax Cuts on Economic Growth: Evidence from the Canadian Provinces. National Tax Journal. 2012, vol. 65, issue 3, p. 563–94. 7. FOOKES, C. (2009). Spending through the Tax System: Tax Expenditures. Policy Perspectives Paper 09/01. Wellington: New Zealand Treasury. August 2009. 8. JAREŠ, M. (2010) Daňové úlevy v České republice. Doktorská dizertační práce. Vysoká škola ekonomická v Praze, Fakulta financí a účetnictví. 214 s. 9. KUBÁTOVÁ, K.; JAREŠ, M. (2011) Identifikace a kvantifikace daňových úlev v ČR v roce 2008. Politická ekonomie. 2011, vol. 59, issue 4, p. 475-489. 10. OECD (2009). Tax Expenditures in OECD Countries. OECD Publishing. 11. POLACKOVA BRIXI, H., C. VALENDUC AND Z. L. SWIFT EDS. (2004). Tax Expenditures: Shedding Light on Government Expenditures through the Tax System. The World Bank Publication, New York. |
| Předběžná náplň práce |
| Outline:
1. Introduction 2. Literature review a. Analysis and critics of tax breaks b. Definitions and approaches to measuring tax expenditures 3. Characterization of corporate tax expenditures in Czech Republic a. Legal framework of tax breaks b. Reporting practice 4. Methodology and data 5. Estimation and results 6. Conclusions Hypotheses: 1. Tax expenditures have a significant impact on the budget and should receive a similar degree of attention as direct expenditures. 2. Tax expenditure analysis gives more transparency of government activities. 3. Tax expenditure statement provides more complete information about efficiency of provision distribution. In order to estimate the extent of corporate tax breaks in Czech Republic 1) For identification of corporate tax incentives in Czech Republic use the study of Martin Jareš (2010) Daňové úlevy v České republice (p. 48-50, 104-118) where he gives a short explanation to each type of tax break and acts that regulate it. 2) For computation of tax expenditures apply a revenue foregone method which is mostly used in developed countries and institutions (for example, Germany, Australia, United States, OECD and World Bank). It is a static estimate of the loss of tax revenue. Hence, the method calculates the amounts that cause the reduction of tax revenues due to the existence of certain tax breaks but does not take into account economic behavior of taxpayers (assumed to be unchanged). This method is relatively simple but the most accurate and reliable. However, it does not give us the whole picture, thus the large tax expenditure will tried to be estimated by revenue gain method. It measures how much revenue could increase if a particular tax concession was removed. This method requires data of elasticity concerning economic activities of taxpayers. Therefore, it can not be counted completely accurate (as taxpayer’s behavior changes) and in some cases changes in behavior can not be found because of the absent of some data. 3) Represent the obtained results and analyze the hypothesis: Comparison of tax expenditures with direct expenditures (theoretically and empirically using the same categories as direct expenditures; direct spendings programs might be transformed into tax expenditures) and tax revenue. Evaluation of tax breaks allocation shows priorities of governments. Tax expenditure reports also draw attention to tax expenditures that might go unnoticed. Sum of tax and direct expenditures measures the total assistance provided by state. Analysis of the effect of tax breaks distribution promotes accountability (assist evaluation of their cost and decision whether to continue them): —Who benefits: Distribution of tax breaks benefits by income level. —Role in economy: Distribution of tax expenditures by function. —Purpose of tax breaks issuance. —Efficiency: Get an empirical answer whether the government intervention stimulates. —By estimating the efficiency: -Compare the increase in revenue (from the increase in GDP caused by investment growth which is attributable to tax incentives (what would be an indirect estimate of its effectiveness)) with the tax expenditure. This ratio used as an indicator of “fiscal efficiency” because it includes comparing the direct negative effect on revenue (tax expenditure) with the indirect positive effect on it (impact on the GDP of the investment increase brought about by tax incentives). -If have enough data about companies returns and investments then will estimate the marginal effective tax rate (OECD,2001): The METR measures the extent to which the tax system reduces the real rate of return on investment, at the margin. 4) The tax expenditure estimates are based on publicly available information sources (depending on the nature of each tax expenditure) such as -the tax statistical reports (Daňová statistika) from Ministry of Finance of the Czech Republic (Ministerstvo financí ČR) (http://www.mfcr.cz .MF - odbor 25 - Strategie daňové politiky a správy (MF - Dept 25 - Tax Policy and Administration Strategy) ; -General Financial Directorate (Generální finanční ředitelství) (http:// www.financnisprava.cz , sekce Daně a pojistné (Taxes and insurance section)); - Automated Tax Information System (Automatizovaný Daňový Informační Systém) (http:// adis.mfcr.cz) -Czech Statistical Office (Český statistický úřad) (http://www.czso.cz, sekce Veřejná databáze (Public database section)) -Czech National Bank (Česká Národní Banka) (https://www.cnb.cz) |
| Předběžná náplň práce v anglickém jazyce |
| Corporate tax breaks is an important topic since it has an impact not only on corporations
themselves but also on the average citizens and overall economy of the country. Germany and the United States are the first countries that started to report tax expenditure information, in the late 1960s. Today, tax expenditure reports are a legal requirement in most of OECD countries. However, Czech Republic is obliged to publish an analysis of tax breaks only from 2014 (required by paragraph 2 of Article 14 Chapter VI of Council Directive No 2011/85/ EU). Therefore, the amount of studies of Czech Republic tax expenditure is limited. In 2010 this topic was well explored and explained by Martin Jareš (Daňové úlevy v České republice) basing on the tax breaks from 2008. The purpose of this paper is to estimate corporate tax breaks of the recent years and analyze the results. The analysis will consist of reasons for providing tax breaks and it’s impact on tax revenue. |