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As it can be seen, in all transition countries the part of intangible capital comprises the biggest part of the country's wealth, while this part is smaller for the countries with worse results. It can also be noticed that those countries that chose a radical path of transition earlier have achieved better results- their wealth per capita and the change in GDP is bigger. Other countries in the period of 2000-2005 considerably increased their national wealth as well, however, the changes in their assets and GDP were quite varied. A more detailed and thorough analysis of the countries' "in transition" property transfer process shows different national wealth utilization results and different possibilities to use own resourses in the most efficient way.
The country's wealth estimation using category "national wealth" could be a very fruitful measure in assessing the effects of the transition course. The comparison of System of National Accounts methodology with the World Bank's national wealth measurement system displays possibilities to show long term results in utilization of nation's or country's available recources. Analysis of wealth magnitudes and dynamics for different transition countries shows the results of different means and approaches to overcome the pitfalls of centrally planned economies on the road to the market economy.
References
1. Edwards P. J. The Value of Biodiversity: Where Ecology and Economy Blend / Edwards P. J., Abivardi C. // Biological Conservation. -199a. - VoI.83 (2). - P. 239-246.
2. GDP per capita (current US$) Washington [Electronic source] ; The
World Bank : [site]. - URL : http://data.worldbank.org/indicator/
NY.GDP.PCAP.CD.
3. Gilbert D. The American Class Structure in an Age of Growing Inequality / D. Gilbert. - NY : Wadsworth Publishing, 2002. - 312 p.
І. Мартінавічус, доктор наук, декан економічного факультету Вільнюський університет, Литва
4. Goldsmith R. W. The National Wealth of the United States in the Postwar Period. - Princeton : Princeton Princeton University Press, 1962. - 434 p.
5. Government Finance Statistics Manual [Electronic source]. - URL : http://www.imf.org/external/pubs/ft/gfs/manual/pdf/all.pdf.
6. Hawken P. Natural Capitalism: Creating the Next Industrial Revolution / Hawken P., Lovins A., Lovins L. H. - Snowmass : Rocky Mountain Institute, 2011. - 396 p.
7. International Association for Research in Income and Wealth. A Summary Survey of National Wealth Estimates [Electronic source]. URL : http://www.roiw.org/8Z1 .pdf.
8. International Valuation Standards Committee. Review of the
International Valuation Standards [Electronic source]. - URL :
http://www.ivsc.org/pubs/comment/2007_critical_review.pdf.
9. International valuation Standards. - London : IVSC, 2005. - 431 p.
10. Jeroen C. J. Ecological Economics: Themes, Approaches, and Differences with Environmental Economics / Jeroen C. J., van den Bergh M. // Regional Environmental Change. - 2001. - Vol. 2 (1). - P. 13-23.
11. Kaganova O. Managing Government Property Assets: International Experiences / Kaganova O. and McKellar J. - Washington, D. C. : The Urban Institute Press, 2006. - 448 p.
12. Lawrence G. Composition of National Wealth and its Impact on the Economic Growth. [Electronic source] / Lawrence G. - URL : http://iaes.confex.com/iaes/IAES66/techprogram/P2345.HTM.
13. Meinen G. Perpetual Inventory Method. Service Lives Discard Patterns and Depreciation Methods. Statistics Netherlands, Department of National Accounts [Electronic source] / Meinen G., Verbiest P., de Wolf P.P. -URL : http://www.oecd.org/dataoecd/13/58/2552337.pdf.
14. OECD Glossary of Statistical Terms [Electronic source]. - URL : http://stats.oecd.org/glossary.
15. Spicker P. The Welfare State. A General Theory / Spicker P. -London : Sage Publications Ltd, 2000. - 208 p.
16. System of National Accounts 2008. - New York, 2009. - 662 p.
17. Thayer R. LifePlace: Bioregional Thought and Practice. - University of California Press, 2003. - 317 p.
18. The Changing Wealth of Nations: Measuring Sustainable
Development in the New Millenium. 2011 [Electronic source]. - URL : http://ssuu.com/world.bank.publications/docs/9780821384886.
19. Where is the Wealth of Nations. Measuring Capital for the 21st Century. - Washington, D. C. : The World Bank, 2006. - 188 p.
Надійшла до редколегії 03.09.12
ОЦІНКА НАЦІОНАЛЬНОГО БАГАТСТВА ТА ЇЇ ВИКОРИСТАННЯ В КРАЇНАХ З ПЕРЕХІДНОЮ ЕКОНОМІКОЮ
Потужність економіки та її можливості можуть бути виміряні за допомогою різних методик і численних макропоказників. Визначення національного багатства дає можливість виявити не тільки накопичені ресурси, але також виражає реальні можливості країни та шлях до сталого розвитку. Вимірювання багатства для країн із перехідною економікою здатне показати в довгостроковій перспективі раціональність розвитку, порівняння структури національних багатств та її компонентів для різних країн. Дві методології (Система національних рахунків і Вимірювання багатства Світовим банком) та порівняння отриманих результатів обговорюються у статті.
Ключові слова: національне багатство, майно, оцінка, Світовий банк, система національних рахунків, країни з перехідною економікою.
Й. Мартинавичус, доктор наук, декан экономический факультет Вильнюсский университет, Литва
ОЦЕНКА НАЦИОНАЛЬНОГО БОГАТСТВА И ЕЕ ИСПОЛЬЗОВАНИЕ В СТРАНАХ С ПЕРЕХОДНОЙ ЭКОНОМИКОЙ
Мощность экономики и ее возможности могут быть измерены с помощью различных методик и многочисленных макропоказателей. Определение национального богатства дает возможность выявить не только накопленные ресурсы, но также предоставляет реальные возможности страны и путь к измерению устойчивого развития. Измерение богатства для стран с переходной экономикой могло бы показать в долгосрочной перспективе рациональность развития, сопоставление структуры национальных богатств и ее компонентов для разных стран. Две методологии (Система национальных счетов и измерение богатства Всемирным банком) и сравнение полученных результатов обсуждаются в статье.
Ключевые слова: национальное богатство, имущество, оценка, Всемирный банк, система национальных счетов, страны с переходной экономикой.
JEL Classification: H30 H62 C68
O. Bajo-Rubio, PhD University of Castilla-La Mancha, Ciudad Real, Spain,
A. Gуmez-Plana, PhD Public University of Navarre, Pamplona, Spain
ALTERNATIVE STRATEGIES TO REDUCE PUBLIC DEFICITS: THE CASE OF SPAIN
High government deficits are a matter of concern in many European countries. We examine the effects of several alternative measures intended to reduce public deficits, distinguishing between those acting through either taxes or spending. Our analysis is applied to the Spanish economy, using a computable general equilibrium model.
Keywords: Government deficit, taxes, spending, computable general equilibrium.
Major fiscal imbalances are a matter of concern in many developed countries, which is particularly true for most European countries, especially those belonging to
the euro area. Accordingly, fiscal consolidation strategies are being pursued in those countries in order to reduce such "excessive" government deficits, and so recovering
© Bajo-Rubio O., Gymez-Plana A., 2013
the confidence of financial markets and avoiding the risk of sovereign default.
The effectiveness of fiscal policy on the levels of economic activity is a recurrent topic on the academic literature. However, the traditional "Keynesian" effects of fiscal policy (i.e., a fiscal expansion leading to an increase in
output and a fiscal contraction leading to a decrease in
output) have been challenged in recent years; see [3].
According to the so called "non Keynesian" effects of fiscal
policy, a contractionary fiscal policy can provoke an expansionary effect on output, due to the increased confidence of the private agents on government's solvency, which would lead to lower expected taxes in the next future.
The generality of these "non Keynesian" effects of fiscal policy has been put into question. On the one hand, successful expansionary fiscal contractions have been coupled with other simultaneous events (such as a decrease in interest rates, a depreciation of the exchange rate, episodes of wage moderation, or a decrease in taxes on labour), which makes rather risky trying to explain the favourable economic evolution just from the restrictive fiscal policy; see [5]. On the other hand, recent studies using a novel methodology (namely, identifying changes in fiscal
policy motivated by the desire to reduce the budget deficit from historical documents) find that fiscal consolidations have a contractionary effect on economic activity, as expected from standard Keynesian models; see [1].
Recent literature has also discussed the composition of the fiscal adjustment measures. According to [1], in the case of a fiscal consolidation, spending cuts are more effective than tax increases in order to stabilize the debt and avoiding a recession; whereas, for the case of a fiscal stimulus, the opposite result would hold, i.e., tax cuts are more expansionary than spending increases.
In this paper, we will present the first results of a more detailed work in process, where we examine the effects of several alternative measures intended to reduce public deficits, distinguishing between those acting through either taxes or spending, for the case of Spain. The recent evolution of public finances in Spain is summarized in Table 1, which offers data on general government expenditure, revenue, surplus (i.e., net lending/borrowing of consolidated general government sector) and consolidated gross debt, as a percentage of GDP, for Spain and the euro area, from 1999 (i.e., the year in which the European monetary union started) to 2011.
Table 1. Government expenditure, government revenue, government surplus and government debt in Spain and the euro area, 1999-2011 (% of GDP) *
Government expenditure Government revenue Government surplus Government debt
Spain euro area Spain euro area Spain euro area Spain euro area
1999 39,9 48,1 38,7 46,7 -1,2 -1,4 62,4 71,6
2000 39,2 46,2 38,2 46,2 -1,0 0,0 59,4 69,2
2001 38,7 47,2 38,1 45,3 -0,5 -2,0 55,6 68,1
2002 38,9 47,6 38,7 44,9 -0,2 -2,7 52,6 67,9
2003 38,4 48,0 38,0 44,9 -0,4 -3,2 48,8 69,1
2004 38,9 47,5 38,8 44,6 -0,1 -2,9 46,3 69,5
2005 38,4 47,4 39,7 44,9 1,3 -2,6 43,1 70,1
2006 38,4 46,8 40,7 45,4 2,4 -1,4 39,6 68,5
2007 39,2 46,1 41,1 45,4 1,9 -0,7 36,2 66,3
200S 41,5 47,2 37,0 45,1 -4,5 -2,1 40,2 70,1
2009 46,3 51,2 35,1 44,8 -11,2 -6,4 53,9 79,9
2010 45,6 51,0 36,3 44,7 -9,3 -6,2 61,2 85,3
2011 43,6 49,4 35,1 45,3 -8,5 -4,1 68,5 87,2
* Source: Eurostat.
As can be seen, the Spanish government deficit was lower than the average of the euro area until 2007; an even a surplus was registered between 2005 and 2007. The start of the crisis meant a dramatic change, with government deficits reappearing in 2008, soaring in 2009 to 11 % of GDP, and slowly decreasing after that date; however, the Spanish government deficit as percentage of GDP in 2011 stands for twice that of the euro area. On the other hand, even though government expenditure as a percentage of GDP has increased in Spain after the start of the crisis at a rather similar than in the euro area, the ratio of government revenue to GDP has experienced a huge fall (six percentage points between 2007 and 2011) that is strongly at odds with its stability for the euro area. Finally, these developments have led to a large increase in the ratio of government debt to GDP, which is however still lower than the average of the euro area.
Accordingly, in the rest of the paper we will provide a first empirical assessment of several alternative policy measures intended to reduce the Spanish government deficits, from both the expenditure and revenue sides. The empirical methodology will make use of a computable general equilibrium (CGE) model, which allows one to gather the consequences of changes in a particular variable on the whole economy under analysis, as well as to obtain the specific effects across the different productive sectors. Thus, the potential of CGE models lies in their
ability to integrate micro and macro elements. As an additional advantage, CGE modelling allows the evaluation of consumers' welfare.
The model is an extension of [2]: a static CGE model describing an open economy disaggregated in 18 productive sectors, with a representative consumer, a public sector and a foreign sector (i.e., the rest of the world). Due to the high unemployment rate in the Spanish economy, the model includes unemployment in a way derived from trade unions models. The equilibrium of the model involves the simultaneous solution of three sets of equations: zero-profit conditions for firms, market clearing in goods and capital markets, and constraints on disposable income (total revenue must equal total expenditure), labour market (includes unemployment) and macroeconomic closure of the model. The zero profit conditions are derived from the behaviour of producers, who maximize their profits subject to technology constraints, characterized by a nested structure of intermediate inputs, capital and labour.
On the consumption side, there is a representative consumer household behaving as a rational consumer, endowed with a fixed amount of capital and time that can allocate to labour and leisure. The representative consumer maximizes her nested utility function, defined over (consumption of) goods, leisure and savings, subject to the budget constraint.
The role of the public sector in the model is twofold. As an owner of resources, its wealth includes income from capital rents, net transfers received from the representative household, and tax revenues; where taxes include social contributions paid by employers and employees, value added taxes, other net indirect taxes, and income taxes. Also, as a purchaser of goods, we distinguish between market goods (i.e., output provided at economically significant prices) and non-market goods (i.e., output provided at non-economically significant prices).
The foreign sector follows the small open economy assumption, where the difference between receipts and payments from the rest of the world is exogenous to guarantee the closure of the model.
Finally, regarding factor markets, there are two productive factors, capital and labour. Capital is provided through fixed endowments both for the representative household and the public sector; there is no international mobility, and no mobility across domestic sectors, which implies that capital is specific. Labour is owned by the representative household; again, there is no international mobility, but labour is now mobile across domestic sectors. Since workers have some market power, wages are related to unemployment.
Calibration has been made using a Social Accounting Matrix (SAM) for the Spanish economy, which represents the benchmark equilibrium of the model. The SAM has been built from the last available input-output symmetric table, for the year 2005, recently published by the Spanish National Institute of Statistics. The model is solved as in [6], using the software GAMS/MPSGE.
Regarding the sectoral classification, the 72 sectors in the input-output table have been aggregated into 18:
• 3 directly representing the main public spending:
Public administration; Non-market education; Non-market health services.
• 7 where public spending is over 1600 million €: Chemicals; Retail trade, repairs; Research and development; Market education; Market health and social services; Non-market public cleanup services; Non-market cultural and recreation activities.
• 6 whose outputs are intermediate inputs for the first three: Electricity; Medical and precision instruments; Other transport equipment; Wholesale trade; Communication services; Other business activities.
• 1 with a small amount of public spending: includes Paper; Transport; Travel agents; Real estate; Market cultural and recreation activities; and Personal services.
• 1 with no public spending: includes the rest of the 72 sectors.
We have simulated a reduction of the public deficit amounting to 1% of Spain's GDP in 2011, so that the ratio public deficit/GDP decreases in 1 percentage point. In turn, the reduction of the public deficit can be achieved through:
- either a decrease in public spending in 3 alternative
sectors, namely: Public administration, Non-market
education, and Non-market health services;
- or an increase in tax collection in 2 alternative taxes, namely: Value Added Tax (VAT), and Other indirect taxes.
Notice that, even though a reduction of the public deficit lowers the ratio deficit/GDP, it also decreases GDP, which in turn leads to an increase in the ratio deficit/GDP, both directly and through a higher deficit via automatic stabilizers. Therefore, the effect of a lower public deficit on the ratio deficit/PIB is not clear-cut.
The effects of the simulations on the main macroeconomic variables are presented in Table 2 as % changes from benchmark for all variables, except for the ratio public deficit/GDP and the unemployment rate, where the figures refer to the change in percentage points.
Table 2. Effects on macroeconomic variables (% change from benchmark) *
V public administration V education V health А VAT A indirect taxes
GDP -0,52 -0,58 -0,39 1,28 0,70
Employment -0,81 -1,10 -0,84 -0,09 -0,43
Real wage rate -0,31 -0,43 -0,32 -0,05 -0,28
Real capital rental rate -1,30 -1,81 -1,66 -0,23 -0,53
Public revenue -0,85 -0,71 -0,50 6,22 5,81
Public expenditure -7,99 -7,83 -7,30 0,42 -0,23
Public deficit/GDP (p.p.) -1,22 -1,23 -1,17 -1,23 -1,28
Unemployment rate (p.p.) 0,43 0,58 0,44 0,07 0,39
* Source: Authors' elaboration.
Summarizing the main results, in all cases GDP and employment decrease, and the unemployment rate increases. Notice that the increase in GDP observed when taxes are raised is simply an accounting issue, since GDP is measured at market prices, i.e., including indirect taxes; when GDP is measured at factor costs it decreases in both cases (results available from the authors). In addition, both the real wage and capital rental rates also decrease, as well as the ratio public deficit/GDP. Comparing the results from decreases in spending versus increases in taxes, the former leads to worse results in terms of the evolution of the levels of activity (especially when spending cuts are performed in education), unlike the latter (especially when VAT is increased). The effects on the ratio public deficit/GDP are similar for both types of measures.
In this paper, we have presented the first results of a more detailed work in process, which tries to provide an empirical assessment of several alternative policy measures intended to reduce the Spanish government deficits, from both the expenditure and revenue sides, using a CGE model calibrated and simulated for the
Spanish economy. In particular, we have simulated a reduction in the public deficit amounting to 1 % of Spain's GDP in 2011, so that the ratio public deficit/GDP decreases in 1 percentage point. We have presented the results of five simulations. In the first three, the reduction in the public deficit has been achieved through a decrease in public spending in 3 alternative sectors, namely, Public administration, Non-market education, and Non-market health services, which represent three potential areas of intervention in the field of expenditure: the wages of the public sector workers, and expenditures on education and health, respectively. In the last two, the reduction in the public deficit has been achieved through an increase in tax collection in 2 alternative taxes, namely, VAT and Other indirect taxes.
Summarizing the main results, all the simulated policies lead to a fall in the levels of activity and an increase in the unemployment rate, at the same time that the ratio public deficit/GDP is lowered. Finally, while the results on the latter variable are similar in all cases, the most contractionary effects on output and employment follow
from a decrease in spending in education, and the least contractionary ones when VAT is increased.
References
1. Alesina A. Large Changes in Fiscal Policy: Taxes vs. Spending /
A. Alesina, S. Ardagna // Tax Policy and the Economy. - 2010. - Vol. 24. -P. 35-68.
2. Bajo-Rubio O. Simulating the Effects of the European Single Market: a CGE analysis for Spain / O. Bajo-Rubio and A. G. Gymez-Plana // Journal of Policy Modeling. - 2005. - Vol. 27. - P. 689-709.
3. Giavazzi F.Can Severe Fiscal Contractions be Expansionary? Tales of Two Small European Countries / F. Giavazzi and M. Pagano // NBER Macroeconomics Annual. - 1990. - Vol. 5. - P. 75-111.
О. Бахо-Рубіо, PhD
Університет Кастілья-Ла-Манча, Сьюдад-Реаль, Іспанія,
A. Гомес-Плана, PhD
Державний університет Наварри, Памплона, Іспанія
АЛЬТЕРНАТИВНІ СТРАТЕГІЇ СКОРОЧЕННЯ ДЕФІЦИТУ ДЕРЖАВНОГО БЮДЖЕТУ ДЛЯ ІСПАНІЇ
Високий дефіцит державного бюджету входить у сферу інтересів багатьох європейських країнах. Ми розглядаємо ефекти декількох альтернативних заходів, спрямованих на скорочення дефіциту державного бюджету через податки або витрати. Наш аналіз застосовується для іспанської економіки з використанням моделі загальної рівноваги.
Ключові слова: дефіцит державного бюджету, податки, видатки, обчислювана загальна рівновага.
О. Бахо-Рубио, PhD
Университет Кастилья-Ла-Манча, Сьюдад-Реаль, Испания,
A. Гомес-Плана, PhD
Государственный университет Наварры, Памплона, Испания
АЛЬТЕРНАТИВНЫЕ СТРАТЕГИИ СОКРАЩЕНИЯ ДЕФИЦИТА ГОСУДАРСТВЕННОГО БЮДЖЕТА ДЛЯ ИСПАНИИ
Высокий дефицит государственного бюджета являются предметом озабоченности во многих европейских странах. Рассмотрены эффекты нескольких альтернативных мер, направленные на сокращение дефицита государственного бюджета через налоги или расходы. Наш анализ применяется для испанской экономики с использованием модели общего равновесия.
Ключевые слова: дефицит государственного бюджета, налоги, расходы, рассчитываемое общее равновесие.
4. Guajardo J. Expansionary Austerity: New International Evidence / Guajardo J., Leigh D., Pescatori A. - Working Paper WP/11/158. -Washington, DC : International Monetary Fund. - July, 2011. - 40 p.
5. Perotti R. The 'Austerity Myth': Gain Without Pain? In Fiscal Policy After the Financial Crisis / Perotti R. ; [ed. Alberto Alesina and Francesco Giavazzi]. - Chicago : The University of Chicago Press, 2012. - 704 p.
6. Rutherford T. F. Applied General Equilibrium Modeling with MPSGe as a GAMS Subsystem: an Overview of the Modeling Framework and Syntax / T. F. Rutherford // Computational Economics, 1999. - Vol. 14. - P. 1-46.
Надійшла до редколегії 03.09.12
Jel classification: E64, G32, H25
E. Bikas, Associate Professor of Department of Finance Vilnius University, Lithuania, G. Keliuotyte-Staniuleniene, Doctoral Student at Department of Finance
Vilnius University, Lithuania
TAX SYSTEMS OF THE MEMBER STATES OF THE EUROPEAN UNION
This article contains analysis of the tax systems of the member states of the European Union. Despite the numerous EU tax harmonization initiatives, national tax systems still have some differences. In order to evaluate these differences a comparative analysis of these tax systems is performed.
Keywords: tax systems, tax equity, tax efficiency, tax administration.
National tax system and its proper functioning (raising tax revenues) are of great importance for sustainability of public finance. Moreover, tax revenues are necessary for funding various functions of the state. Proper execution of state functions leads to economic and social well-being of its citizens.
Tax system is a difficult and complex subject to study. For that reason it is difficult to specify the particular method which would be appropriate to evaluate and compare tax systems in all cases. Tax systems could be evaluated on the basis of classical principles of taxation - tax equity, tax efficiency, simplicity of tax administration. This method helps to reveal whether tax system, existing in a given country, violates or not general principles of taxation, as well as provides the directions for improving tax system. Tax system is being evaluated and key areas for improvement are set regarding to each principle of taxation independently. However, it must be recognized that conducting assessment of tax system by this method faces with a problem that evaluation criteria are not easily expressed in terms of clearly measurable parameters, which, in turn, complicates the research and decreases the objectivity of results. Moreover, different authors suggest different indicators corresponding to the same principles of taxation. In order to assess several national tax systems, indicators corresponding to general principles of taxation should be evaluated in conjunction, not isolated one from another. Therefore, comparative analysis of calculated indicators and systemic approach are necessary.
The object of this research is tax system. The purpose of research is assessment of equity, efficiency and simplicity of administration of tax systems of 27 member states of the European Union. Although the primary data necessary for comparative analysis are available in public databases, during the investigation we encountered problem of data freshness. Consequently, in order to reach appropriate reliability and accuracy of research results, the comparative analysis of tax systems was carried out based on year 2009 data.
1. Theoretical basis of taxation
Tax revenues represent the largest portion of government income and act as a main source for government needs funding [5], therefore formulation of an appropriate national tax system can be identified as one of the most important problems of public economics. Each national tax system not only has a significant impact on smooth functioning of the public finance system, but also affects economic decisions of operators and, finally, influences wellbeing of citizens. For this reason, theoretical and practical issues of tax systems are widely discussed in academic literature.
The importance of taxes can be based on its importance for formulating public finance, as well as funding general need of the country and its citizens. The government needs to collect some (usually monetary) resources which are used to finance its functions. Government participation in economic processes and regulation are extremely significant
© Bikas E., Keliuotyte-Staniuleniene G., 2013
