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Impact of Harmonization on the Implicit Tax Rate of Consumption

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  • Andrea Feher
  • Bogdan Virgil Condea
  • Daniela Harangus

Abstract

This paper brings to the foreground an indicator rather less used in specialized studies - the implicit tax rate of consumption - as an effective tax rate of consumption. In an empirical analysis, we try to analyse the impact of the main determinants on the implicit tax rate of consumption. The analysis is based on the panel technique in order to show the impact of tax harmonization on consumer taxation at EU27, EU15 and NMS12 levels, testing three hypotheses: (1) the implicit tax rate of consumption is directly influenced by the economic growth rate; (2) the effects of harmonization are more pronounced in the new EU member states; (3) during an economic crisis, the budget deficit and public debt determine changes in the implicit tax rate.

Suggested Citation

  • Andrea Feher & Bogdan Virgil Condea & Daniela Harangus, 2019. "Impact of Harmonization on the Implicit Tax Rate of Consumption," Prague Economic Papers, Prague University of Economics and Business, vol. 2019(4), pages 449-464.
    • Handle: RePEc:prg:jnlpep:v:2019:y:2019:i:4:id:705:p:449-464
    DOI: 10.18267/j.pep.705
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    References listed on IDEAS

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    1. Ozlem Onaran & Valerie Boesch & Markus Leibrecht, 2012. "How Does Globalization Affect The Implicit Tax Rates On Labor Income, Capital Income, And Consumption In The European Union?," Economic Inquiry, Western Economic Association International, vol. 50(4), pages 880-904, October.
    2. Conconi, Paola & Perroni, Carlo & Riezman, Raymond, 2008. "Is partial tax harmonization desirable," Journal of Public Economics, Elsevier, vol. 92(1-2), pages 254-267, February.
    3. Razin, Assaf & Sadka, Efraim, 1991. "International tax competition and gains from tax harmonization," Economics Letters, Elsevier, vol. 37(1), pages 69-76, September.
    4. Barbora Slintáková & Stanislav Klazar, 2010. "Impact of Harmonisation on Distribution of VAT in the Czech Republic," Prague Economic Papers, Prague University of Economics and Business, vol. 2010(2), pages 133-149.
    5. Christopher F Baum, 2001. "Residual diagnostics for cross-section time series regression models," Stata Journal, StataCorp LP, vol. 1(1), pages 101-104, November.
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    Cited by:

    1. Vanina Adoriana Trifan & Silviu Gabriel Szentesi & Lavinia Denisia Cuc & Mioara Florina Pantea, 2023. "Assessing Tax Compliance Behavior Among Romanian Taxpayers: An Empirical Case Study," SAGE Open, , vol. 13(3), pages 21582440231, September.

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    More about this item

    Keywords

    value added tax; implicit tax rate; budgetary deficit; public debt; econometric mo-delling;
    All these keywords.

    JEL classification:

    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • F37 - International Economics - - International Finance - - - International Finance Forecasting and Simulation: Models and Applications
    • F38 - International Economics - - International Finance - - - International Financial Policy: Financial Transactions Tax; Capital Controls

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