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The Rates and Revenue of Bank Transaction Taxes

Author

Listed:
  • Jorge Baca-Campodónico
  • Luiz de Mello
  • Andrei Kirilenko

Abstract

This paper provides cross-country empirical evidence on the productivity of bank transaction taxes (BTTs). Our data set comprises six Latin American countries that have levied BTTs since the late 1980s: Argentina, Brazil, Colombia, Ecuador, Peru and Venezuela. We find that, for a given tax rate, revenue declines over time. Therefore, in order to meet a fixed revenue target in real terms, the tax rate needs to be raised repeatedly. However, we also find that successive increases in the tax rate erode the tax base by more than they raise revenue yield and that the higher the increase in the tax rate, the more and faster the tax base is eroded. We conclude that BTTs do not provide a reliable source of revenue, especially over the medium term. Ce document fournit une étude empirique de comparaison internationale sur la productivité des impôts sur les transactions bancaires (ITB). Notre base de données correspond à 6 pays d’Amérique latine qui ont un impôt sur les transactions bancaires: Argentine, Brésil, Colombie, Équateur, Pérou et Venezuela. Nous trouvons que le revenu diminue au fil du temps pour un taux d’imposition donné. Pour cette raison, le taux d’imposition doit être augmenté régulièrement en vue d’atteindre une cible de revenu en terme réel. Cependant, nous voyons que les augmentations successives des taux d’imposition réduisent l’assiette d’imposition plus que le rendement obtenu, et plus grande est la hausse du taux d’imposition, plus rapide est l’érosion de l’assiette d’imposition. Nous concluons que l’imposition des transactions bancaires ne fournit pas une source de revenu fiable, particulièrement sur le moyen terme.

Suggested Citation

  • Jorge Baca-Campodónico & Luiz de Mello & Andrei Kirilenko, 2006. "The Rates and Revenue of Bank Transaction Taxes," OECD Economics Department Working Papers 494, OECD Publishing.
  • Handle: RePEc:oec:ecoaaa:494-en
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    File URL: http://dx.doi.org/10.1787/652416621832
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    Citations

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    Cited by:

    1. Martínez-Vázquez, Jorge & Vulovic, Violeta, 2011. "Tax structure in Latin America: its impact on the real economy and compliance," Research Department working papers 224, CAF Development Bank Of Latinamerica.
    2. repec:col:000107:015643 is not listed on IDEAS
    3. Lucia Pacheco & Liliana Rojas-Suarez, 2017. "An Index of Regulatory Practices for Financial Inclusion in Latin America," Working Papers 17/15, BBVA Bank, Economic Research Department.
    4. Andrés Murcia Pabón, 2007. "Determinantes Del Acceso Al Crédito De Los Hogares Colombianos," Ensayos sobre Política Económica, Banco de la Republica de Colombia, vol. 25(55), pages 40-83, Diciembre.
    5. Thornton Matheson, 2011. "Taxing Financial Transactions; Issues and Evidence," IMF Working Papers 11/54, International Monetary Fund.
    6. repec:bdr:ensayo:v:35:y:2017:i:83:p:154-160 is not listed on IDEAS
    7. Ignacio Lozano-Espitia & Hernando Vargas-Herrera & Norberto Rodríguez-Niño, 2017. "Financial transaction tax and banking margins: An empirical note for Colombia," ENSAYOS SOBRE POLÍTICA ECONÓMICA, BANCO DE LA REPÚBLICA - ESPE, vol. 35(83), pages 154-160, June.
    8. Serra, José & Afonso, José Roberto Rodrigues, 2007. "Tributação, seguridade e coesão social no Brasil," Políticas Sociales 133, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).

    More about this item

    Keywords

    bank debit tax; bank transaction tax; impôt sur les retraits bancaires; impôts sur les transactions bancaires; productivité des impôts; tax productivity;

    JEL classification:

    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G29 - Financial Economics - - Financial Institutions and Services - - - Other
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence

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