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Chile was the first country in Latin America to impose a tax on carbon-emitting electricity generators. However, the current regulation does not allow firms to include emission charges as costs for the dispatch and pricing of electricity in real time. The regulation also includes side-payment rules to reduce the economic losses of some carbon-emitting generating units. In this paper we develop an equilibrium model with endogenous investments in generation capacity to quantify the long-run economic inefficiencies of an emissions policy with such features in a competitive setting. We benchmark this policy against a standard tax on carbon emissions and a cap-and-trade program. Our results indicate that a carbon tax with such features can, at best, yield some reductions in carbon emissions at a much higher cost than standard emission policies. These findings highlight the critical importance of promoting short-run efficiency by pricing carbon emissions in the spot market in order to incentivize efficient investments in generating capacity in the long run. Keywords: Carbon tax, Equilibrium modeling, Market design, 1. INTRODUCTION Threats of global warming are the main driver behind the implementation of climate and environmental policies that seek to curb carbon emissions. To date, nearly 25% of global [...]

Should energy use be lowered by using broad-based taxes or through promoting and mandating energy savings through command-and-control measures and targeted subsidies? We integrate a micro-simulation analysis, based on a representative sample of 9,734 households of the Swiss population, into a numerical general equilibrium model to examine the efficiency and equity implications of these alternative regulatory approaches. We find that at the economy-wide level taxing energy is five times more cost-effective than promoting energy savings. About 36% of households gain under tax-based regulation while virtually all households are worse off under a promotion-based policy. Tax-based regulation, however, yields a substantial dispersion in household-level impacts whereas heterogeneous household types are similarly affected under a promotion-based approach. Our analysis points to important trade-offs between efficiency and equity in environmental policy design. Keywords: Environmental policy, Instrument choice, Market-based instruments, Command-and-control, Efficiency, Equity, Heterogeneous households, Microsimulation, General equilibrium, 1. INTRODUCTION Fossil-based energy use generates environmental externalities. Should such energy use be lowered using taxes or through promoting and mandating energy savings? The choice and design of regulatory instruments [...]

Theory and recent empirical literature suggest that social and professional connections may influence corporate policy. However, inference may be biased by the possibility that firms who share peers also share unobserved characteristics that are correlated with observed policy. Using a novel identification strategy, we predict and find that director connections through well-known island tax havens have a significant effect on corporate tax policy. Specifically, we find that U.S. firms with directors who are connected to firms domiciled on the islands of the Bahamas, Bermuda, or the Caymans exhibit significantly greater tax avoidance than other U.S. firms. The presence or arrival of an island director is associated with a reduction of between one and three percentage points in the firm's effective tax rate. We also observe a significant increase in the use of tax haven subsidiaries following the arrival of the island director. History: Accepted by Mary Barth, accounting. Keywords: tax havens * tax avoidance * tax aggressiveness * social networks * director interlocks, 1. Introduction A growing body of research suggests that, in addition to firm characteristics, a broad range of corporate policy choices are influenced by the social and professional networks in [...]

In 2015, the Chinese government raised tobacco excise tax for the first time since 2009. Changing from previous practice, the State Tobacco Monopoly Administration raised its cigarette prices at the same time. We assessed the early impact of the 2015 tax increase on cigarette prices, sales volumes, tax revenue generation and the potential effect on prevalence of smoking in China. Between 2014 and 2016, the retail price of cigarettes increased on average by 11%, with the cheapest category of cigarette brands increasing by 20%. The average proportion of tax in the price of cigarettes rose from 51.7% to 55.7%. Annual cigarette sales decreased by 7.8%, from 127 to 117 billion packs. The increase in cigarette prices could be associated with a 0.2% to 0.6% decrease in the proportion of adults smoking, representing between 2.2 and 6.5 million fewer smokers. Tax revenues from cigarettes increased by 14%, from 740 to 842 billion Chinese yuan between 2014 and 2016, reflecting an extra 101 billion Chinese yuan in tax revenues for the government. The 2015 tax increase shows that tobacco taxation can provide measurable benefits to both public health and finance in China. The experience also highlights the potential for tobacco taxation to contribute to China's broader development targets, including the sustainable development goals and Healthy China 2030. Looking forward, this link to development can be facilitated through multisectoral research and dialogue to develop consistent cross-sectoral objectives for tobacco tax policy design and implementation. En 2015, le gouvernement chinois a augmente la fiscalite sur le tabac pour la premiere fois depuis 2009. Contrairement aux pratiques passees, l'Administration du monopole d'Etat sur le tabac a decide d'augmenter en meme temps les prix des cigarettes. Nous avons evalue les premiers impacts de la hausse de 2015 des taxes sur le tabac, les volumes vendus, les recettes fiscales qui en ont decoule et l'effet potentiel de cette mesure sur la prevalence du tabagisme en Chine. Entre 2014 et 2016, le prix de vente au detail des cigarettes a augmente de 11% en moyenne, avec une augmentation de 20% pour les marques les moins cheres. La proportion moyenne des taxes sur le prix des cigarettes est passee de 51,7% a 55,7%. Les ventes annuelles de cigarettes ont baisse de 7,8%, passant de 127 a 117 milliards de paquets. L'augmentation des prix des cigarettes pourrait etre associee a une reduction comprise entre 0,2% et 0,6% de la proportion de fumeurs dans la population adulte, ce qui represente entre 2,2 et 6,5 millions de fumeurs en moins. Les recettes fiscales obtenues sur la vente de cigarettes ont augmente de 14% (740 milliards de yuans en 2014 contre 842 milliards en 2016), apportant ainsi au gouvernement 101 milliards de yuans de recettes fiscales supplementaires. La hausse de la fiscalite operee en 2015 en Chine montre que la taxation du tabac peut avoir des benefices appreciables a la fois sur la sante publique et sur les finances publiques. Cette experience revele aussi le potentiel de la taxation du tabac dans la poursuite des objectifs plus larges de developpement de la Chine, notamment des objectifs de developpement durable et des objectifs du programme <> (une Chine saine en 2030). A l'avenir, ce lien avec les objectifs de developpement pourrait etre optimise par des recherches et un dialogue multisectoriels visant a definir des objectifs intersectoriels coherents pour l'elaboration et l'application des politiques fiscales sur le tabac. En 2015, el gobierno chino subio el impuesto especial sobre el tabaco por primera vez desde 2009. De manera distinta a la practica anterior, la Administracion Estatal de Monopolio de Tabaco subio los precios de los cigarrillos al mismo tiempo. Se evalua el impacto inicial de la subida de impuestos de 2015 sobre los precios de los cigarrillos, los volumenes de venta, la generacion de ingresos tributarios y el posible efecto sobre la prevalencia del tabaco en China. Entre 2014 y 2016, el precio minorista de los cigarrillos subio de media un 11 % y la categoria mas barata de marcas de cigarrillos subio en un 20 %. La proporcion media de impuestos en el precio de los cigarrillos subio del 51,7 % al 55,7%. Las ventas anuales de cigarrillos cayeron un 7,8 %,de 127 000 a 117 000 millones de paquetes. La subida de los precios de los cigarrillos podria estar asociada con una reduccion del 0,2 % al 0,6 % en la proporcion de fumadores adultos, lo que representa entre 2,2 y 6,5 millones de fumadores menos. Los ingresos fiscales procedentes de los cigarrillos aumentaron un 14%, de 740 000 a 842 000 millones de yuanes chinos entre 2014y 2016, lo que se refleja un aumento de 101 000 millones de yuanes chinos en ingresos fiscales para el gobierno. La subida tributaria de 2015 muestra que el impuesto sobre el tabaco puede brindar unos beneficios considerables tanto para la salud publica como para las finanzas en China. Los ingresos tributarios de los cigarrillos subieron un 14 %, de 740 000 a 842 000 millones de yuanes chinos entre 2014 y 2016, lo que equivale a 15 000 millones adicionales de dolares estadounidenses en ingresos fiscales para el gobierno. La subida de los impuestos sobre el tabaco en China en 2015 supone una demostracion de que los impuestos sobre el tabaco podrian generar beneficios cuantificables tanto para la salud publica como para las finanzas. La experiencia tambien destaca el potencial de los impuestos sobre el tabaco de contribuir a los objetivos de desarrollo mas amplios de China, incluidos los objetivos de desarrollo sostenible y salud de China para 2030. De cara al futuro, este vinculo con el desarrollo puede facilitarse a traves de la investigacion y el dialogo multisectoriales para desarrollar objetivos intersectoriales coherentes para el disenoy la implementacion de la politica tributaria del tabaco., [phrase omitted] Introduction In China, tobacco use is contributing to the increase in noncommunicable diseases. (1) More than 1 million Chinese adults die annually from tobacco use and this number [...]

This paper explores the link between foreign direct investment (FDI) and the BEPS (base erosion and profit shifting) practices of multinationals (MNEs). It puts the spotlight on the outsize role of offshore investment hubs as major players in global corporate investment, a role that is largely due to MNEs' tax planning, although other factors contribute. The paper shows that tax avoidance practices enabled by FDI through offshore hubs are responsible for significant leakage of development financing resources. In policy terms, these findings call for enhanced cooperation and synergies between international tax and investment policymaking.Keywords: multinational enterprise, BEPS, revenue losses, developing countries, offshore investment, 1. Introduction: an investment perspective on international taxationMNEs build their corporate structures through cross-border investment. They construct those corporate structures in the most tax-efficient manner possible, within the constraints of [...]

The multilateral efforts, led by the Organisation for Economic Cooperation and Development (OECD), to address base erosion and profit shifting (BEPS) have attracted much attention from tax policy makers, practitioners and academics. In 2012, the OECD/G20 BEPS Project was launched to address BEPS through a range of international tax policy measures. A key part of the BEPS package was the Action 11 report, which considered the fiscal and economic impacts of BEPS and produced an empirical estimate of the global corporate income tax (CIT) revenue losses arising from BEPS of between 4 per cent and 10 per cent of global CIT revenues. This research note highlights some of the data-related and methodological challenges facing researchers attempting to estimate the fiscal impacts of BEPS, discusses some of the methodological approaches that have recently been applied to this end, and provides a preview of the forthcoming release of the first edition of the OECD Corporate Tax Statistics.Keywords: international taxation, corporate income tax, base erosion and profit shifting, BEPS, 1. IntroductionRecent efforts by the Organisation for Economic Cooperation and Development (OECD) to address corporate tax base erosion and profit shifting (BEPS) have been driven by the common understanding that [...]

PrologueI sincerely thank the Board of Regents of the American College of Tax Counsel for inviting me to give this lecture. It is a great honor to be asked to [...]

Most prior studies model tax avoidance as a function of firm-level characteristics and do not consider how individual executive characteristics affect tax avoidance. This paper investigates whether executives with superior ability to efficiently manage corporate resources engage in greater tax avoidance. Our results show that moving from the lower to upper quartile of managerial ability is associated with a 3.15% (2.50%) reduction in a firm's one-year (five-year) cash effective tax rate. We examine how higher-ability managers reduce income tax payments and find that they engage in greater state tax planning activities, shift more income to foreign tax havens, make more research and development credit claims, and make greater investments in assets that generate accelerated depreciation deductions. Identifying a manager characteristic related to firms' tax policy decisions adds to our understanding of the factors that explain the substantial variation in corporate income tax payments across firms. Keywords: tax avoidance * management style * managerial ability, 1. Introduction This study examines the relation between executives' ability to efficiently manage corporate resources and corporate tax avoidance. Income tax payments range from 20% to 40% of pretax income [...]