Less evasion means more production? the effect of the consumption tax on the economic performance of the restaurant and bars subsector in Colombia
Published
:Issue
:Section
:License
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
How to Cite
Dimensions Metrics
fiscal policy, regulation, taxation, tax deduction, tax evasion
For fiscal policy makers, it is essential to have empirical evidence to support and inform ex ante the decisions to be made and the policies to be proposed in tax matters. That is why there are numerous empirical studies that have shown various effects of fiscal shocks on macroeconomic variables such as employment, wages, investment, and income. This article develops a conclusive analysis of the multivariate effect that a Colombian tax regulation had on the economic subsector of restaurants, catering and bars, starting with the change in the value added tax VAT (16%), which allows the deduction of the tax paid for intermediate consumption, for the consumption tax (8%) which, although has a lower rate, does not allow this deduction. The potential tax paid with both taxes was estimated, seeking to know if the regulation meant a reduction in the burden and, subsequently, making use of a discontinuous regression model that compares this subsector in question with other similar subsectors present in DANE’s annual services survey, a positive effect of this regulation on the variables of interest was found. For example, this tax change meant an increase of 23% in the average nominal production of the companies in the sector when compared with other sectors that were not covered by this reform.
Grupo Proindustria, el país que no quiere crecer parte 2, 2017
DANE, Encuesta Mensual de Servicio EMS, Bogotá: DANE, 2019
Congreso de COlombia, Ley 1607, Bogotá: Diario Oficial, 2012
K. Mertens y M. Ravn, "Empirical Evidence on the Aggregate Effects of Anticipated and Unanticipated US Tax Policy Shocks", American Economic Journal: Economic Policy, vol. 4, nº 2, pp. 145-181, 2012
C. Romer y D. Romer, "The Macroeconomic Effects of Tax Changes: Estimates Based on a New Measure of Fiscal Shocks", American Economic Review, vol. 100, nº 3, pp. 763-801, 2010
C. Favero y G. Francesco, "Measuring Tax Multipliers: The Narrative Method in Fiscal VARs" American Economic Journal: Economic Policy, vol. 4, nº 2, p. 69–94, 2012
R. Perotti, "The Effects of Tax Shocks on Output: Not So Large, but Not Small Either DOI: 10.1257/pol.4.2.214", American Economic Journal: Economic Policy, vol. 4, nº 2, pp. 214-257, 2012
P. Carrillo, D. Pomeranz y M. Singhal, "Dodging the Taxman: Firm Misreporting and Limits to Tax Enforcement", American Economic Journal: Aplied economics, vol. 9, nº 2, pp. 144-164, 2014.
I. Asuad y J. Salazar, Las Cargas Tributarias como impedimentos para el crecimiento de las Pymes en Colombia. (Tesis)., Cali: Pontificia Universidad Javeriana, 2016
M. Cárdenas y V. Mercer-Blackman, El Sistema Tributario Colombiano: Impacto sobre la eficiencia y la competitividad, Bogotá: Fundación para la Educación Superior y el Desarrollo, 2005
A. Roy, "Some Thoughts on the Distribution of Earnings", Oxford Economic Papers, vol. 3, nº 2, pp. 135-146, 1951
D. Rubin, "Estimating Causal Effects of Treatment in Randomized and Nonrandomized Studies", Journal of Educational Psychology, vol. 66, nº 5, pp. 688-701, 1974
DANE, "Muestra Trimestral de Servicios (MTS)", 2017. [En línea]. Available: http://www.dane.gov.co/index.php/estadisticas-por-tema/servicios/muestra-trimestral-de-servicios-mts
DANE, "Encuesta Anual de Servicios (EAS)", s/f. [En línea]. Available: http://www.dane.gov.co/index.php/estadisticas-por-tema/servicios/encuesta-anual-de-servicios-eas
R. Bonilla , R. Córdoba, A. Lewin y O. Morales, Comisión de Expertos para la Equidad y la Competitividad Tributaria. Informe final presentado al Ministro de Hacienda y Crédito Público, Bogotá: Fedesarrollo, 2015
M. Feldstein, "The Effect of Marginal Tax Rates on Taxable Income: A Panel Study of the 1986 Tax Reform Act", The Journal of Political Economy, vol. 103, nº 3, pp. 551-572, 1995
R. Chetty,"Is the Taxable Income Elasticity Sufficient to Calculate Deadweight Loss? The Implications of Evasion and Avoidance" American Economic Journal: Economic Policy, vol. 1, nº 2, pp. 31-52, 2009
Y. Gorodnichenko, J. Martinez Vazquez y K. Sabirianova, "Myth and Reality of Flat Tax Reform: Micro Estimates of Tax Evasion Response and Welfare Effects in Russia", Journal of Political Economy, vol. 117, nº 3, pp. 504-554, 2009
J. Marion y E. Muehlegger, "Measuring Illegal Activity and the Effects of Regulatory Innovation: A Study of Diesel Fuel Tax Evasion", KSG Working Paper, nº RWP07-026, pp. 1-42, 2007
F, L. Fergusson, C. Molina y J. Riaño, "Consumers as VAT" Evaders": Incidence, Social Bias, and Correlates in Colombia", Economía journal, vol. 19, nº 2, pp. 21-67, 2019
Congreso de Colombia, Ley 1819, Bogotá: Diario Oficial, 2016
For fiscal policy makers, it is essential to have empirical evidence to support and inform ex ante the decisions to be made and the policies to be proposed in tax matters. That is why there are numerous empirical studies that have shown various effects of fiscal shocks on macroeconomic variables such as employment, wages, investment, and income. This article develops a conclusive analysis of the multivariate effect that a Colombian tax regulation had on the economic subsector of restaurants, catering and bars, starting with the change in the value added tax VAT (16%), which allows the deduction of the tax paid for intermediate consumption, for the consumption tax (8%) which, although has a lower rate, does not allow this deduction. The potential tax paid with both taxes was estimated, seeking to know if the regulation meant a reduction in the burden and, subsequently, making use of a discontinuous regression model that compares this subsector in question with other similar subsectors present in DANE’s annual services survey, a positive effect of this regulation on the variables of interest was found. For example, this tax change meant an increase of 23% in the average nominal production of the companies in the sector when compared with other sectors that were not covered by this reform.
Grupo Proindustria, el país que no quiere crecer parte 2, 2017
DANE, Encuesta Mensual de Servicio EMS, Bogotá: DANE, 2019
Congreso de COlombia, Ley 1607, Bogotá: Diario Oficial, 2012
K. Mertens y M. Ravn, "Empirical Evidence on the Aggregate Effects of Anticipated and Unanticipated US Tax Policy Shocks", American Economic Journal: Economic Policy, vol. 4, nº 2, pp. 145-181, 2012
C. Romer y D. Romer, "The Macroeconomic Effects of Tax Changes: Estimates Based on a New Measure of Fiscal Shocks", American Economic Review, vol. 100, nº 3, pp. 763-801, 2010
C. Favero y G. Francesco, "Measuring Tax Multipliers: The Narrative Method in Fiscal VARs" American Economic Journal: Economic Policy, vol. 4, nº 2, p. 69–94, 2012
R. Perotti, "The Effects of Tax Shocks on Output: Not So Large, but Not Small Either DOI: 10.1257/pol.4.2.214", American Economic Journal: Economic Policy, vol. 4, nº 2, pp. 214-257, 2012
P. Carrillo, D. Pomeranz y M. Singhal, "Dodging the Taxman: Firm Misreporting and Limits to Tax Enforcement", American Economic Journal: Aplied economics, vol. 9, nº 2, pp. 144-164, 2014.
I. Asuad y J. Salazar, Las Cargas Tributarias como impedimentos para el crecimiento de las Pymes en Colombia. (Tesis)., Cali: Pontificia Universidad Javeriana, 2016
M. Cárdenas y V. Mercer-Blackman, El Sistema Tributario Colombiano: Impacto sobre la eficiencia y la competitividad, Bogotá: Fundación para la Educación Superior y el Desarrollo, 2005
A. Roy, "Some Thoughts on the Distribution of Earnings", Oxford Economic Papers, vol. 3, nº 2, pp. 135-146, 1951
D. Rubin, "Estimating Causal Effects of Treatment in Randomized and Nonrandomized Studies", Journal of Educational Psychology, vol. 66, nº 5, pp. 688-701, 1974
DANE, "Muestra Trimestral de Servicios (MTS)", 2017. [En línea]. Available: http://www.dane.gov.co/index.php/estadisticas-por-tema/servicios/muestra-trimestral-de-servicios-mts
DANE, "Encuesta Anual de Servicios (EAS)", s/f. [En línea]. Available: http://www.dane.gov.co/index.php/estadisticas-por-tema/servicios/encuesta-anual-de-servicios-eas
R. Bonilla , R. Córdoba, A. Lewin y O. Morales, Comisión de Expertos para la Equidad y la Competitividad Tributaria. Informe final presentado al Ministro de Hacienda y Crédito Público, Bogotá: Fedesarrollo, 2015
M. Feldstein, "The Effect of Marginal Tax Rates on Taxable Income: A Panel Study of the 1986 Tax Reform Act", The Journal of Political Economy, vol. 103, nº 3, pp. 551-572, 1995
R. Chetty,"Is the Taxable Income Elasticity Sufficient to Calculate Deadweight Loss? The Implications of Evasion and Avoidance" American Economic Journal: Economic Policy, vol. 1, nº 2, pp. 31-52, 2009
Y. Gorodnichenko, J. Martinez Vazquez y K. Sabirianova, "Myth and Reality of Flat Tax Reform: Micro Estimates of Tax Evasion Response and Welfare Effects in Russia", Journal of Political Economy, vol. 117, nº 3, pp. 504-554, 2009
J. Marion y E. Muehlegger, "Measuring Illegal Activity and the Effects of Regulatory Innovation: A Study of Diesel Fuel Tax Evasion", KSG Working Paper, nº RWP07-026, pp. 1-42, 2007
F, L. Fergusson, C. Molina y J. Riaño, "Consumers as VAT" Evaders": Incidence, Social Bias, and Correlates in Colombia", Economía journal, vol. 19, nº 2, pp. 21-67, 2019
Congreso de Colombia, Ley 1819, Bogotá: Diario Oficial, 2016
Most read articles by the same author(s)
- Fernel Manuel Cárdenas-García, Jorge de Jesús Cañizares-Arévalo, Maribel Cárdenas-García, Theoretical approach to andragogic learning modality distance education, from the use of ICT , Mundo FESC Journal: Vol. 11 No. S2 (2021)