In this chapter: Distinguish between different indirect taxes and indicate their relative, importance as sources of revenue, discuss the merits of indirect taxation, describe the consumption type VAT, explain the economic effects of VAT, describe the personal consumption tax base, discuss the rationale for a personal consumption tax,...
• • • • • • • Distinguish between different indirect taxes and indicate their relative Importance as sources of revenue Discuss the merits of indirect taxation Describe the consumption type VAT Explain the economic effects of VAT Describe the personal consumption tax base Discuss the rationale for a personal consumption tax • • • • • Discuss the shortcomings of a personal consumption tax Distinguish between patterns of taxation in industrialised countries and developing countries Identify the direction of international tax reform Compare tax competition with tax harmonisation Contrast international tax reforms with the major tax reforms in South Africa since the late 1960s Indirect taxes are taxes that are imposed on commodities or market transactions • • • • • Single-stage commodity tax Multi-stage commodity tax Excise duties Customs duties Sumptuary taxes • Practical • “Invisible” • Choice/ability to determine tax liability • Achievement of multiple objectives • Indexed for inflation • Simple administration • • • • Regressive Inefficiencies Policy conflict Inflationary effect Value added tax is a multi-stage sales tax levied on the value added at the different stages of production • • • • • Restricted-origin principle Single vs multiple rates Economic effects – – – – Revenue Efficiency and the tax rate Equity Administration • • • • Equitable Efficient Return to work effort Beneficial to developing countries Lack of success elsewhere Risks Administration Ability to distinguish between consumption & investment • Treatment of bequests and gifts • Transition • • • • • Patterns in industrialised and developing countries – – – – – • Predominant sources of revenue Importance of tax on individuals vs companies Insignificance of payroll, workforce and property taxes Dependence on general sales tax/VAT Significance of trade taxes International tax reform – Base broadening Economic globalisation may be defined as the integration of economies throughout the world through trade, financial flows, the exchange of technology and information, and the movement of people (Ouattara) • • • • Cross-border shopping Transfer pricing Tax evasion and avoidance Pressure to lower taxation levels • • • • • • • • Independent revenue authority Tax amnesty Single rate structure VAT for gambling and fee-based financial services Tax on interest, rental and other trading income introduced and abolished Introduction of capital gains tax Residence-based income tax Lowering of company tax rate for small businesses • • • • • Tax incentives to promote direct investment Secondary tax on companies replaced with dividend tax Abolishment of RSC and JSB levies Environmental charges and incentives National health insurance (NHI) to be phased in ... countries and developing countries Identify the direction of international tax reform Compare tax competition with tax harmonisation Contrast international tax reforms with the major tax reforms... personal consumption tax base Discuss the rationale for a personal consumption tax • • • • • Discuss the shortcomings of a personal consumption tax Distinguish between patterns of taxation in... Indirect taxes are taxes that are imposed on commodities or market transactions • • • • • Single-stage commodity tax Multi-stage commodity tax Excise duties Customs duties Sumptuary taxes •