Igor Kotlán

World Tax Index: New Methodology for OECD Countries, 2000–2012

Abstract This paper follows our previous article, Kotlán and Machová (2012a), which presented an indicator of the tax burden that can be used as an alternative to the tax quota, or for implicit tax rates in macroeconomic analyses. This alternative is an overall multi-criteria index called the WTI - the World Tax Index. The aim of this paper is to present the new World Tax Index 2013 and its methodology, which allowed us to compute it for all 34 OECD countries for the 2000-2012 period, with special references to methodology changes from the previous version. We show that, using the WTI, the highest tax burden is measured for Denmark, Belgium and Turkey, while the lowest tax burden is in Switzerland, Ireland, Chile or Japan. The total ranking of the countries is from 66% correlated with the ranking according to the tax quota, mainly due to a strong correlation in the case of property taxes, personal income taxes and VAT-type taxes. In these cases, the tax quota seems to be a good approximator of the tax burden. However, there is no correlation between corresponding tax quotas and WTI sub-indices for corporate taxes or selective consumption taxes. In those cases, the tax quota apparently fails and is not suitable for use in further analyses.

Expenditures on Collective and Individual Services: Discussion on the Classification of Government Expenditures with Regard to their Inclusion into Growth Models

Abstract The aim of this paper is to examine the effects of government expenditures on long-run economic growth in developed countries using their different breakdown. Empirical analysis is performed for a panel of 34 OECD countries in the period 2000-2012. Above all, the results support the idea that conclusions of previous studies on this topic may be strongly distorted by inappropriate classification of expenditures, typically in the case of expenditures on education and health. These are usually considered productive and thus growth enhancing, but if their part of R&D expenditures is detached, their effect on growth is in fact negative. In general, it is concluded that government expenditures on individual services have negative effects on growth, while the impact of expenditures on collective services is positive.

Právní jistota – možný problém daňové politiky vyspělých zemí?

In the OECD, tax policy makes one of the highly sensitive areas of critical importance to the governance of global economy. The OECD authorities realize the importance of tax systems´ structure for economic output and social well-being, and thus the tax policy has made one of the OECD policy priorities since the OECD´s earliest days. However, the policy has been aimed on giving recommendations to national authorities solely in the area of optimal tax mix structure, while other important aspects of the tax systems have remained omitted. One of such aspects is legal certainty about the development of taxation. If the certainty is low, expectations of economic entities are deformed, which leads to substitution effect, and higher risk occurs. Therefore, the aim of the paper is to validate the hypothesis that higher legal certainty in the area of taxation significantly promotes economic growth. This hypothesis is confirmed within the analysis, and more attention to legal aspects of taxation is suggested.