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Econometric Accounting of the Australian Corporate Tax Rates: a Firm Panel Example

Author

Listed:
  • Feeny, Simon
  • Gillman, Max

    (Cardiff Business School)

  • Harris, Mark N.

Abstract

The paper presents an econometric accounting of the effective corporate tax rate in Australia for the years 1993 to 1996. The estimation is a panel of Australian firms that uses a specially gathered financial data base. Using fixed and random effects, the model specifies that the statutory tax rate is estimated as the constant term of the model. An ability to find an estimated statutory tax rate that is close to the actual rate suggests a certain confidence in the estimated effects of the others factors affecting the effective tax rate. The results show importance for interest expenses, depreciation allowances, debt/asset structures, and the foreign ownership of firms. There is support for an Australian role as a preferential tax location.

Suggested Citation

  • Feeny, Simon & Gillman, Max & Harris, Mark N., 2005. "Econometric Accounting of the Australian Corporate Tax Rates: a Firm Panel Example," Cardiff Economics Working Papers E2005/16, Cardiff University, Cardiff Business School, Economics Section.
  • Handle: RePEc:cdf:wpaper:2005/16
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    References listed on IDEAS

    as
    1. Reint E. Gropp, 1997. "The Effect of Expected Effective Corporate Tax Rates on Incremental Financing Decisions," IMF Staff Papers, Palgrave Macmillan, vol. 44(4), pages 485-509, December.
    2. Hausman, Jerry A & Taylor, William E, 1981. "Panel Data and Unobservable Individual Effects," Econometrica, Econometric Society, vol. 49(6), pages 1377-1398, November.
    3. Mark Harris & Simon Feeny, 2003. "Habit persistence in effective tax rates," Applied Economics, Taylor & Francis Journals, vol. 35(8), pages 951-958.
    4. Mundlak, Yair, 1978. "On the Pooling of Time Series and Cross Section Data," Econometrica, Econometric Society, vol. 46(1), pages 69-85, January.
    5. Gupta, Sanjay & Newberry, Kaye, 1997. "Determinants of the variability in corporate effective tax rates: Evidence from longitudinal data," Journal of Accounting and Public Policy, Elsevier, vol. 16(1), pages 1-34.
    6. Oecd, 1998. "Survey of OECD Work on International Investment," OECD Working Papers on International Investment 1998/1, OECD Publishing.
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    Cited by:

    1. Marco Carreras & Purnachandar Dachapalli & Giulia Mascagni, 2017. "Effective corporate tax burden and firm size in South Africa: A firm-level analysis," WIDER Working Paper Series 162, World Institute for Development Economic Research (UNU-WIDER).
    2. Luisito Bertinelli & Arnaud Bourgain & Abdoul Karim Diamoutene, 2017. "Corporate Effective Tax Rate in Sub-Saharan Africa: Evidence from Formal Companies of Mali," DEM Discussion Paper Series 17-18, Department of Economics at the University of Luxembourg.
    3. Marco Carreras & Chandu Dachapalli & Giulia Mascagni, 2017. "Effective corporate tax burden and firm size in South Africa: A firm-level analysis," WIDER Working Paper Series wp-2017-162, World Institute for Development Economic Research (UNU-WIDER).

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    More about this item

    Keywords

    Effective tax rate; accounting model; panel data; random and fixed effects;
    All these keywords.

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy

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