Taxation of Financial Intermediation Theory and Practice for Emerging Economies

by USA, Oxford University Press; Honohan, Patrick

• ISBN13: 9780821354346
• ISBN10: 0821354345
• Format: Paperback
• Copyright: 2003-06-19
• Publisher: World Bank Publications

Summary

This volume examines the possibilities and pitfalls to successful financial sector tax reform from theoretical, empirical and practical perspectives. It explores the possibilities and limitations of "big ideas" such as removal of all capital income taxation, the application of VAT to financial services or heavy reliance on financial transactions taxes. The risks of attempting to use financial sector taxes as corrective instruments are stressed. Two defensive criteria are advanced as key: making the financial tax system as arbitrage- and inflation-proof as is practicable.Each commissioned essay develops a distinct aspect of the area. Theoretical chapters model the impact of taxes on intermediaries, the design of optimal tax schemes, the role of imperfect information and the relationship with saving. Current practice in the industrial world and case studies of distorted national systems provide an empirical underpinning. Finally, experience with several of the main practical issues is discussed in chapters ranging from the income tax treatment of intermediary loan-loss reserves, the VAT, financial transactions taxes, deposit insurance and inflation. Contributors are distinguished academics and practitioners.

Table of Contents

Foreword	xi
Preface	xiii
Contributors	xv
1. Avoiding the Pitfalls in Taxing Financial Intermediation	1	(30)
Patrick Honohan
PART I: THEORETICAL AND SYSTEM-WIDE ISSUES
2. Theoretical Perspectives on the Taxation of Capital Income and Financial Services	31	(50)
Robin Boadway and Michael Keen
3. Taxation of Banks: Modeling the Impact	81	(46)
Ramon Laminal
4. Tax Incentives for Household Saving and Borrowing	127	(42)
Tullio Jappelli and Luigi Pistaferri
5. Corrective Taxes and Quasi-Taxes for Financial Institutions and Their Interaction with Deposit Insurance	169	(28)
Philip L. Brock
PART II: PRACTICAL EXPERIENCE
6. Taxation of Financial Intermediation in Industrial Countries	197	(44)
Mattias Levin and Peer Ritter
7. Seigniorage, Reserve Requirements, and Bank Spreads in Brazil	241	(28)
Eliana Cardoso
8. Taxation of Financial Intermediaries as a Source of Budget Revenue: Russia in the 1990's	269	(22)
Brigitte Granville
PART III: PARTICULAR TAXES
9. Corporate Income Tax Treatment of Loan-Loss Reserves	291	(22)
Emil M. Sunley
10. Bank Debit Taxes: Yield Versus Disintermediation	313	(12)
Andrei Kirilenko and Victoria Summers
11. Securities Transaction Taxes and Financial Markets	325	(20)
Karl Habermeier and Andrei Kirilenko
12. Consumption Taxes: The Role of the Value-Added Tax	345	(36)
Satyn Poddar
13. The Accidental Tax: Inflation and the Financial Sector	381	(40)
Patrick Honohan
Index	421