Presumptive Taxation: Revenue and Automatic Stabilizer Aspects

August 1, 1993

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S. Nuri Erbas Presumptive Taxation: Revenue and Automatic Stabilizer Aspects, (USA: International Monetary Fund, 1993) accessed December 26, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

Presumptive taxation has been adopted in many countries to tax hard-to-tax activities and reduce evasion. Further, in view of the possible efficiency gains from such techniques, a case can be made for adopting presumptive taxation of global income. This paper addresses two questions. First, could revenue be increased by adopting presumptive tax methods? Second, would presumptive income taxation contribute to macroeconomic instability because it lacks the automatic stabilizer property of standard progressive income taxation? Two simple models suggest that there is scope for increasing revenue under presumptive taxation without necessarily undermining economic stability. The relevance of the first model for presumptive excise taxation in Pakistan is also examined.

Subject: Income and capital gains taxes, Income tax systems, National accounts, Personal income, Presumptive tax, Revenue administration, Taxes

Keywords: Aggregate tax liability, Distortionary taxation, Global, Income and capital gains taxes, Income level, Income tax systems, Net revenue collection, Personal income, Presumptive tax, Presumptive taxation, Revenue gain, Risk-averse taxpayer, Tax liability, Utility function, WP

Publication Details

Pages:

20
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1993/069
Stock No:

WPIEA0691993
ISBN:

9781451960693
ISSN:

1018-5941

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