Mohammad Ghasem Rezaee; Mahboubeh Sabzrou; Mohammad Rezaee-Pour
Volume 13, Issue 51 , January 2014, , Pages 163-187
Abstract
In this paper, we focus on two major questions about tax incentives: 1) Do the countries compete over tax incentives in a same way as they compete over tax rates? ; 2) Do the offered tax incentives results in attracting investment and increasing economic growth? The results of testing the first question, ...
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In this paper, we focus on two major questions about tax incentives: 1) Do the countries compete over tax incentives in a same way as they compete over tax rates? ; 2) Do the offered tax incentives results in attracting investment and increasing economic growth? The results of testing the first question, in which spatial econometric technique for panel data and Maximum Likelihood Estimation (MLE) Method were used, indicate that the developing countries compete over tax rates and tax holidays (and don’t compete over investment rebates); In other words, governments consider other states’ tax policies as a benchmark for judging their own tax policies. The results of testing the second question, in which econometric techniques of dynamic data and Generalized Moments Method (GMM) were used, indicate that tax rates and tax holidays influence foreign direct investment while investment rebates don’t have such an effect and only tax rates have significant relationship with private sector investment and economic growth. Tax incentives which were tested here include tax rates reduction, tax holiday and investment rebates and empirical evidence is based on time period 1985- 2008 and the data for 45 developing countries.
Mohammad-Ghasem Rezaee; Mohammad Rezaee-Poor; Mahboube Sabzrou
Volume 13, Issue 50 , October 2013, , Pages 155-168
Abstract
From the perspective of political economy, the majority vote rule is a base for taxing, financing and supplying public goods. It is obvious that the citizens’ satisfaction is the determining factor in public acceptance of paying taxes and supplying public goods with regards to the extent and method ...
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From the perspective of political economy, the majority vote rule is a base for taxing, financing and supplying public goods. It is obvious that the citizens’ satisfaction is the determining factor in public acceptance of paying taxes and supplying public goods with regards to the extent and method of supply public goods. However, if democracy (the majority vote) is related to the size of tax burden relative to public services, it is implied by the cost-benefit model that citizens evaluate the costs of financing the government budget by their received benefits. By applying this model, this paper examines the effect of democracy on the ratio of governments’ tax to expenditures by cross-country panel data for the period of 1996-2010. The results indicate that this tax-to-expenditure ratio depends on the public political participation and tax level increase can be observed robustly in democratic systems.
