Macroeconomic Effects of Tax Rate and Base Changes [electronic resource] : Evidence from Fiscal Consolidations / Era Dabla-Norris.
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TextSeries: IMF Working Papers; Working Paper ; No. 18/220Publication details: Washington, D.C. : International Monetary Fund, 2018Description: 1 online resource (47 p.)ISBN: 1484377451 :Subject(s): Business Fluctuations | Business Taxes And Subsidies | General, International, Or Comparative | Personal Income And Other Nonbusiness Taxes And Subsidies | TaxationAdditional physical formats: Print Version:: Macroeconomic Effects of Tax Rate and Base Changes: Evidence from Fiscal ConsolidationsOnline resources: IMF e-Library | IMF Book Store Abstract: This paper examines the macroeconomic effects of tax changes during fiscal consolidations. We build a new narrative dataset of tax changes during fiscal consolidation years, containing detailed information on the expected revenue impact, motivation, and announcement and implementation dates of nearly 2,500 tax measures across 10 OECD countries. We analyze the macroeconomic impact of tax changes, distinguishing between tax rate and tax base changes, and further separating between changes in personal income, corporate income, and value added tax. Our results suggest that base broadening during fiscal consolidations leads to smaller output and employment declines compared to rate hikes, even when distinguishing between tax types.
This paper examines the macroeconomic effects of tax changes during fiscal consolidations. We build a new narrative dataset of tax changes during fiscal consolidation years, containing detailed information on the expected revenue impact, motivation, and announcement and implementation dates of nearly 2,500 tax measures across 10 OECD countries. We analyze the macroeconomic impact of tax changes, distinguishing between tax rate and tax base changes, and further separating between changes in personal income, corporate income, and value added tax. Our results suggest that base broadening during fiscal consolidations leads to smaller output and employment declines compared to rate hikes, even when distinguishing between tax types.
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