Introduction
Taxes have an important place in our lives as a subject of our earnings. Our earnings and transactions are taxed according to different types of taxes. As a worker, our earnings are subject to income tax and nearly all our expenditures are subject to value added tax (VAT). As a company, our earnings are subject to both corporate tax and VAT and, we pay withholding taxes for our workers and stamp duties in our agreements. In all these transactions, we want to pay the minimum amount of taxes, because they create extra costs for us. Oppositely, from the governments’ point of view, taxes are the most important sources to finance their expenditures and so they try to collect as much taxes as possible. However, achieving this target is not easy as it seems. Governments have only two options which are levying on direct taxes or indirect taxes. Relying only on one of these types of taxes is not efficient, because both tax types have its advantages and disadvantages in the real world, so governments have to find an optimal tax structure by balancing direct and indirect taxes to reach maximum revenue of taxes.
In this paper, in order to examine the indirect tax reforms of developing countries suggested by International Monetary Fund (IMF) and World Bank in 1980’s, firstly, tax structures of Organization for Economic Cooperation and Development (OECD) and European Union (EU) countries will be examined in the context of developed countries. Hence, I will try to reveal which type of taxes these countries levy on. Secondly,
common determinants of a good tax policy will be provided as applicable to all types of countries whether they are developed, developing or poor. Then, in the light of these determinants, I will try to argue that indirect tax reforms in developing countries did not become the optimal tax policies for them.
Tax Structure of OECD Countries
When tax structures of OECD countries are examined from 1965 to 2005, it is clear that the share of indirect tax revenues decreased even if they have tried to rely more heavily on indirect taxes. When we look at 1965 figures in Table 1, we see that direct taxes have a proportion of 61.5 percent while taxes on consumption have a proportion of 38.4 percent. After every decade, we see that there is a decrease in indirect taxes as a percentage of total tax revenues. When we look at 2005, we observe that tax revenue coming from taxes on consumption decreased from 38 percent in 1965 to 32 percent in 2005. Similarly, if we look Table 2, we can observe in 2006, especially in OECD Pacific countries, the use of indirect taxes decreased even more than total countries’ decline which is 28.7 percent. According to OECD (2007), the reduction in the share of taxes on consumption was balanced by an increase in the share of taxes on income. The increase came mainly from social security contributions with 8 percent increase since 1965.
Table 1 - Revenue Shares of Major Taxes in the OECD Area
1965 1975 1985 1995 2005
Personal Income Tax 26.2 29.8 29.7 27.1 24.6
Corporate Income Tax 8.8 7.6 8.0 8.0 10.3 Social Security Contributions 17.6 22.0 22.1 24.7 25.6 Payroll Taxes 1.0 1.3 1.1 0.9 0.8 Property Taxes 7.9 6.3 5.2 5.5 5.6 Direct Taxes 61.5 67 66.1 66.2 66.9 Taxes On Consumption 38.4 32.8 33.7 32.4 31.9
Of which VAT and
Sales Tax 13.6 14.5 16.4 17.7 18.9
Indirect Taxes 38.4 32.8 33.7 32.4 31.9
Table 2 - Tax Composition of OECD Countries in 2006 Indirect Taxes as a Percentage of Total Tax Revenue Direct Taxes as a Percentage of Total Tax Revenue Total Total OECD 32.3 67.7 100 OECD America 32.8 67.2 100 OECD Pacific 28.7 71.3 100 OECD Europe 32.9 67.1 100 Source: OECD, 2008.
If we get into more detail and look into the composition of indirect taxes, we observe that VAT played an important role in the decrease of indirect tax revenues since 1965. In 1965, consumption taxes were composed of mostly sales taxes and only three countries had VAT. However, in 2005, 29 of the 30 OECD countries are using VAT. As stated in OECD (2007), while VAT started to be used, the revenue share of consumption taxes rose but total revenue from all taxes on consumption fell because of a decline in revenues from excise duties and other specific taxes in OECD countries.
In brief, when we analyze the tax composition of OECD countries between 1965 and 2005, although OECD countries started to apply VAT and tried to increase their indirect tax revenues, it is clear that their indirect tax revenues decreased and direct tax revenues relatively increased. According to OECD (2007), the spread of VAT use in OECD countries caused the decline of indirect tax revenues compared to direct taxes.
Tax Structure of European Union
Member states of European Union (EU) have different tax revenue compositions compared to OECD countries and they have higher proportion of indirect tax revenue shares. When analyzing EU member states, because there are differences in the use of direct and indirect taxes among the members, we need to separate the analysis as old and
new member states. As it is seen in Figure 1 below, old member states earn tax revenues mostly from direct taxes, indirect taxes, and social contributions in equal shares.
Figure 1 : Tax Structure of 27 Old EU Member States
On the other hand, as it is observed in Figure 2 below, the new member states use lower share of direct taxes compared to indirect taxes in total tax revenues. In numbers, 29 percent of tax revenue comes from direct taxes whereas 35 percent of tax revenue comes from indirect taxes. According to European Communities Report (2009), there are two reasons for lower direct tax revenues in the new member states. The first one is that the use of flat and low tax rates on income taxes and corporate taxes in the new member states caused lower tax revenues from direct taxes. In numbers, the average income tax rate is 37.8 percent in EU whereas new member states such as Bulgaria have no more than 20 percent of income tax rates. The other one is that collection of personal income tax needs a good income distribution and tax administration. Hence, compared to new member states, old members have better income distribution over the population and better tax administrations. Consequently, old members are able to collect more revenues from direct taxes.
Tax Structure of 27 Old EU Me mbe r State s
32,27%
33,87% 0,40%
2,30% 31,17%
T axes on Income and Wealth
T axes on Production and Imports
Other Imputed Social Contributions
Actual Social Contributions Source: European Comission (2009)
Tax Structure of 13 New Me mbe r State s 29% 33% 0% 3% 35%
T axes on Income and Wealth
T axes on Production and Imports
Other
Imputed Social Contributions
Actual Social Contributions
Figure 2 : Tax Structure of 13 New EU Member States
In brief, although there are differences among tax structures of EU member states, indirect taxes have relatively high shares of indirect tax revenues compared to OECD countries. The only difference among the states is that old member states have tax revenues between indirect and direct taxes in equal shares whereas new member states which are underdeveloped compared to old members relied heavily on indirect taxes.
Determinants of a Good Tax Policy
As observed from above examinations, OECD countries, EU’s old member and new member countries have different type of tax structures. Although the tax structure differences occur among countries, the determinants of a good tax policy are common for all countries. According to Tanzi and Zee (2000), main determinants of a good tax policy are that it should finance government expenditures and provide economic
efficiency. Agreeing with these statements, Bird and Zolt (2008) adds the fairness issue as an important determinant of a good tax system.
Financing Government Expenditures
First of all, a good tax system must generate enough revenue to finance government expenditures. Unless tax revenues grow adequately to finance public services, governments have three choices which are reducing expenditures, raising tax rates or changing other structural characteristics of the system. As Bird and Zolt (2003) argued, “As a working rule, revenue growth should be equal to the overall economic growth rate, unless a country wants to increase the size of its government”.
The rate at which revenues increase over time differs depending on the tax structure and the speed of economic growth (Bird and Zolt, 2003). The income elasticity of a tax system measures how fast revenues grow relative to the economy. Elasticity is defined as the percentage change in tax revenues divided by the percentage change in gross domestic product (GDP). Elasticity equal to one means that tax revenues will remain a constant share of GDP. Elasticity greater than one indicates that tax revenues grow more rapidly than income. In principle, revenues should grow at the same rate as desired expenditures. However, in real world, many emerging countries have great difficulty in achieving this target. This leads to tax reforms aimed firstly at closing short term revenue gaps. Tax policies performed in such economically and politically difficult circumstances fail to resolve the underlying basic problem of inadequate revenue elasticity.
In this context, the overall elasticity of a tax system is calculated as the average of the elasticity of different taxes, weighted by the percentage of total taxes raised by the tax. The elasticity of a tax depends on the specific characteristics of its structure. The most elastic tax is usually personal income tax. The elasticity of the corporate income tax is volatile because in a recession corporate profits fall more sharply than overall economic growth. Countries that depend heavily on taxation of natural resources such as oil or
minerals are vulnerable to recurring roll. Consumption taxes are more elastic if they are used for more rapidly growing goods and services rather than just traditional goods and if they are used as a percentage of the price rather than on the specific number of units purchased. A balanced set of tax instruments rather than a single revenue source will lower tax revenue volatility, just as an individual investor can reduce the volatility of his or her investment portfolio by adopting a diversified investment strategy (Bird and Zolt, 2003).
Efficiency Concerns
Secondly, a good tax policy should provide economic efficiency (Tanzi and Zee, 2000). All tax structures create costs on society and a good tax policy has to find a way to minimize those costs. These costs occur when the amount of resources available for society's use is reduced by taxes. This happens in two ways.
Primarily, taxes cost something to collect (Bird and Zolt, 2005). On average, the cost of collecting taxes in developed countries is roughly 1 percent of tax revenues. In emerging countries, the costs may be higher. In addition, taxpayers earn compliance costs in meeting their tax obligations, in addition to the payment of tax. Administration costs may be reduced when compliance costs are increased. For example, when taxpayers are required to provide more information to the tax administration, compliance costs for the taxpayers increase whereas it decreases tax administration costs.
Secondly, taxes raise distortion costs (Bird and Zolt, 2005). Most taxes change relative prices and so change the decisions made by businesses and individuals. These changes in the behavior of businesses and individuals reduce the efficiency and lower the output and well being of the country. For example, taxes on wages reduce incentives to work. The higher the tax rate on wages in the formal sector, the less attractive working in the formal sector becomes relative to working in the untaxed informal sector. Meanwhile,
consumption taxes also discourage work. Taxes on spending increase the amount of time one must work to pay for goods and services through the marketplace. As taxes are not imposed on leisure, all taxes discourage work. No matter how well the government uses the resources received through taxation, governments need to limit the negative
consequences of tax induced changes in behavior.
These two costs to the society have to be minimized by a good tax policy. In order to achieve it, first, tax bases should be as broad as possible (Bird, 2008). For example, a broad based consumption tax will still discourage work effort, but such a tax will minimize distortions in the consumption of goods if all or most goods and services are subject to tax. A few items, such as gasoline, tobacco products, and alcohol, may be taxed at a relatively higher rate, either because of regulatory reasons or because the demand for these products is relatively unresponsive to taxation. The tax base for income tax should also be as broad as possible, treating all income from similar sources as uniformly as possible.
Secondly, tax rates should be set as low as possible, given revenue needs (Bird, 2008). The efficiency cost of taxes arises from their effect on relative prices and generally increases proportionally to the square of the tax rate, so that doubling the rate of a tax implies a four times increase in its efficiency costs. From an efficiency perspective, it is better to raise revenue by imposing a single rate on a broad base rather than by dividing that base into segments and imposing differential rates on each segment.
Thirdly, taxes on production such as corporate income taxes and sales taxes, other than VAT, should be limited (Bird, 2008). Such taxes are especially distorting, because they may affect the location of businesses, change the ways in which production takes place, and change the forms in which business is conducted.
Fairness Concerns
The last important determinant of a good tax policy is fairness (Bird and Zolt, 2008). From one perspective, taxes exist primarily to secure social justice. Governments do not need taxes to secure funds because they can simply print money they need. The tax system can be viewed as a mechanism to prevent inflation by taking money away from the private sector in as efficient, equitable, and administratively inexpensive way as possible.
There are different ways for a country to be able to do that. For example, some countries may wish to favor cities, others rural areas. Some may choose to favor rich savers in the name of growth, others the poor in the name of redistribution. Like most policy
instruments, tax policy can play many tunes. What is critical from social justice
perspective is to be aware of the equity implications of tax reforms for different groups and to ensure that the actual outcome of such reforms is consistent with the intended outcome.
To determine the fairness of a tax structure, governments must consider the economic incidence of taxation (Bird and Zolt, 2008). It is important to distinguish between those who have the liability to pay a particular tax and those who suffer the economic
incidence or burden of the tax.
Tax burdens fall on individuals in their roles as consumers, producers, and factor suppliers, not on corporations or other institutions. For example, although the VAT law may require firms to pay VAT to the government, it is likely that the real economic incidence of VAT falls on the ultimate consumer.
Indirect Tax Reform in Developing Countries
In the tax world, countries are ordered according to their tax revenues to gross domestic product ratios and the results classify the countries as developed, developing and poor. When those countries observed, it is revealed that the higher the level of per capita income, the more countries rely on direct taxes, especially those on personal income. These figures are also proved earlier in this article by examining OECD countries’ statistics between 1965 and 2005 and old EU member countries. On the other hand, developing countries relied more heavily on indirect taxes since 1980’s with the suggestions of international institutions, IMF and the World Bank. According to those institutions’ view, direct taxes require both a more effective tax administration and more sophisticated taxpayers; conditions not exist in developing countries. Subsequently, by replacing direct taxes with indirect taxes, developing countries could improve
macroeconomic stability and efficiency and cope with the differences to developed countries (Yonah and Margalioth, 2006).
Starting from 1980’s, 109 developing countries switched from direct to indirect taxes as observed in table 3 below. As a sample, India’s total direct tax revenue declined to 13 percent in 2004 from 28 percent in 1990 (Poirson, 2006). Thailand’s indirect tax share in its tax revenue grew up to 58 percent in 2003 (Sujjapongse, 2005). However, when those indirect tax reforms in developing countries are examined under the common
determinants of a good tax policy which are providing efficiency and fairness, increasing government revenue and growth rate, it is revealed that indirect taxes could not satisfy those issues in developing countries.
Table 3 - Spread of Indirect Tax Systems in Developing and Poor Countries Between 1980 and 2006
Time Period
Countries Adopting Indirect Tax Systems
Amount of Adopting Countries
1980 – 1989
Dominican Republic, Indonesia, New Zealand, Greece, Japan, Niger, Taiwan, Guatemala, Malawi, Philippines, Tunisia, Haiti, Mexico, Turkey, Hungary, Morocco, Senegal
17
1990 – 1999
Albania, Egypt, Mali, Slovenia, Algeria, El Salvador, Malta, South Africa, Armenia, Estonia, Mauritania, Sri Lanka, Azerbaijan, Fiji, Mauritius, Suriname, Bangladesh Finland, Moldova, Switzerland, Barbados, Gabon, Mongolia, Tajikistan, Belarus, Georgia, Mozambique, Tanzania, Benin, Ghana, Nepal, Thailand, Bulgaria, Guinea Nigeria, Togo, Burkina Faso, Iceland, Pakistan, Trinidad Tobago, Cambodia, Jamaica, Papua New Guinea, Turkmen, Cameroon, Kazakhstan, Paraguay, Uganda, Kenya, Poland, Ukraine, China, Kyrgyzstan, Romania, Uzbekistan, Congo, Latvia Russia, Vanuatu,, Croatia, Samoa, Venezuela, Cyprus, Lithuania, Vietnam Czech Republic, Madagascar, Slovakia, Zambia
69
2000 – 2005
Chad, Jordan, Namibia, Belize, Dominica Island, Laos, Rwanda, Bosnia Herzegovina, Guinea, Lebanon, Serbia, Botswana, Ethiopia, Lesotho, Sudan, Cape Verde, Gambia, Macedonia, Tonga , Central Africa, India, Montenegro, Zimbabwe
23
TOTAL 109
Source: International Tax Dialogue (2005).
Efficiency Problem
Firstly, indirect taxes could not provide production efficiency because of large informal economies in developing countries (Emran and Stiglitz, 2007). Informal economy is still very large in a typical developing economy, often exceeding 50 percent of GDP. When the size of the informal and shadow economy exceeds 50 percent of GDP, indirect taxes cannot provide production efficiency. A revenue neutral reduction in direct taxes with an increase in indirect taxes leads to a worsening of consumer welfare when the incomplete coverage of indirect taxes is factor in. The intuition is very straightforward; indirect tax which could only be levied on the formal firms generated incentives for the firms to move to the informal economy. On the other hand, direct taxes affect both the formal
and informal firms symmetrically and thus do not bring on the production substitutions in favor of the informal economy.
Moreover, when the large informal economy is neglected as IMF and World Bank did in 1980’s, production inputs cannot be taxed optimally by relying on indirect taxes (Emran and Stiglitz, 2007). It was argued by the supporters of tax reform in developing countries from the use of direct to indirect taxes was that the inputs used in the informal economy is taxed optimallyby setting indirect tax rates appropriately as part of an optimal tax design and so it is optimal to decrease direct tax revenue. This argument is misleading, because the analysis mentioned above does not take into account the implications of missing risk markets and market failures in developing countries.
Indirect taxation of inputs like fertilizer through VAT exemption of agriculture are welfare reducing as the farmers bear all the production and price risks because of missing risk markets for crops in most of the developing countries (Emran and Stiglitz, 2007). Even if there is drought and the farmer loses all her crops, it is not possible for them to claim input rebates under a VAT exemption. The tax burden is not sensitive to the weather and price shocks faced by the farmers. It stays same even when their revenue and thus the value added is reduced significantly because of a drought. In contrast, a tax on output, like an export tax has the desirable characteristic that the tax burden goes down with a negative production or price shock.
Also, indirect taxes create market failures especially in the labor market (Heady, 2001). There are two types of problems occur in the labor market with indirect taxes. The first one is that migrants from rural areas are unable to sell the land they have and this restricts the movement of labor from agriculture to industry. The second one is that the wage in manufacturing sector is set above market levels produces an incentive for people to leave agriculture and to seek urban jobs despite the existence of urban
unemployment. Most of the developing countries were affected by both problems and they both led to the result that too few people were employed in the manufacturing sector. Therefore, agriculture sector should not be taxed heavily by indirect taxes and should be taxed in order to discourage further migration.
When the efficiency is concerned, another problem is that indirect taxes create additional distortion and administrative costs more that direct taxes do (Emran and Stiglitz, 2007). As stated in common determinants of a good tax policy, distortion costs which are created by taxes have to be eliminated and administrative costs for governments have to be reduced. In IMF’s and World Bank’s suggestions of using indirect taxes, there was a common argument that in favor of a consumption tax compared to direct taxes were that direct taxes are doubly distortionary and using consumption taxes reduced administrative costs. These arguments however fail to recognize that the indirect taxes also create an additional distortion and an administrative cost.
Indirect taxes create distortion costs and so create a distance between the consumer and producer prices as in VAT, but direct taxes do not (Emran and Stiglitz, 2007). This has important implications in a developing economy where the standard separability of consumption and production decisions are not valid and home productions are used more. The reason is that the market participation by the rural households is limited and so the distance between the consumer and producer prices created by indirect taxes works effectively as a transaction costs band and the households for which the shadow value of a commodityfalls from the market. Thus, the imposition of indirect taxes can result in a contraction of the extent of the market. Incontrast, direct taxes leave the extent of the market unchanged
Also, the administrative costs of indirect taxes are much higher than that of direct taxes. According to Emran and Stiglitz (2007), when the administration cost is taken into
account, the case against indirect tax structure in developing countries is strengthened. It is sometimes argued that indirect taxes are self enforcing under an invoice credit system of rebates and thus administratively attractive. However, the evidence shows that
because of the extensive informal economy, indirect taxes are far from self enforcing. In fact, both theoretically and empirically in the presence of informal sector, invoice credit system generates a chain effect of informalization between the upstream and
downstream firms.
Financing Government Expenditures
The second problem with the indirect tax reforms is that developing countries could not increase government revenues as expected. When indirect taxes are applied, countries need developed and highly used financial sectors, because in this way governments can gain access to firms’ bank records and use this information in enforcing the tax law. According to Yonah and Margalioth (2006), when IMF and World Bank suggested indirect tax reforms, they assumed that decreasing direct taxes would decrease distortion and the value of using financial sector would be higher for the firms and, high inflation rates in developing countries make firms use financial sector to be protected from inflation. So, firms which are using financial sector could earn a higher nominal interest rate on their bank deposits whereas those firms that rely on cash transactions to evade tax stays vulnerable to inflation. However, these assumptions did not work out when the developing countries observed. As Gordon and Li (2005) stated, unlike the expectations, firms started to shift cash transactions and did not use financial sector. From that point on, governments tried to increase revenues by increasing indirect tax rates. Though, inequality among the firms increased, because while firms using cash transactions evaded taxes, firms using financial sector paid taxes. Consequently, more firms shifted to cash transactions and governments could not increase their revenues.
In order to increase government revenues and eliminate financial sector problems in developing countries, main policy focus has to be on reform of the domestic financial sector rather than decreasing direct taxes or depending on high inflation (Yonah and Margalioth, 2006). Any policies that raise the value of the services provided by financial intermediaries will increase the usage of the financial sector, raising efficiency and allowing the government to collect more revenue. Conversely, anything that undercuts the perceived value of the services provided by the financial sector such as a bank failure can weaken the portion of GDP collected in tax revenue, in addition to any direct effects on GDP through loss of financial intermediation.
Furthermore, governments could not be successful to reach high growth rates which are important for financing government expenditures by relying on indirect taxes (Emran and Stiglitz, 2007). If the growth rate is high, governments can increase their
expenditures and increase their revenues. However, relying more heavily on indirect taxes has important implications for long run growth in a developing economy. The concern is that as firms move to the informal sector, the technological progress in an economy slows down. The evidence shows that the informal sector firms suffer from technological improvement. For example, the labor productivity of an informal firm is only 39 percent in Turkey and 46 percent in Brazil. Therefore, a move to the informal sector negatively affects the average level of technology in an economy. More
importantly, a decrease in formal sector is likely to have dynamic effects, especially because of the fact that learning by doing and technological progress is a positive function of the size of the formal sector. This will affect negatively the long run
economic growth in a developing country.In addition, there are important cross sectoral externalities from the formal industrial sector to the agricultural sector, and thus a shrinking formal industrial sector may constrain the growth of the agricultural sector.
Fairness Problem
The third and the last problem is that indirect tax reforms in developing countries could not achieve reducing inequality and poverty and so providing fairness to the society. After indirect taxes started to be used, developing countries only cared about efficiency and raising government revenues. According to Yonah and Margalioth (2006), focusing only on efficiency and raising government revenues resulted in the adoption of
regressive tax policies. In other words, governments increased the tax rates on goods with low price elasticity of demand such as cereals, because they cause little behavioral response. In this way, they tried to compensate the revenue gaps caused by informal sectors. However, since the poor consume these products more, they could not consume these products as much as they did before the policy. Also, richer people benefited from the policy more than poor people by consuming relatively more, because they have higher purchasing power.
Another fairness problem is the failure of the assumption that reducing taxes on labor and compensating it with indirect taxes would decrease unemployment, so the social welfare. The reasoning is that by reducing taxes on labor, returns to labor income would become more attractive and hence encourages the take up of jobs (European
Commission, 2006). However, cutting personal income taxes did not directly reduce the unemployment in real. The first reason was that most of the firms cut salaries by the same amount that labor taxes decreased. The other reason was that when indirect taxes were increased by the same amount as personal income taxes were cut, the price of goods increased so that workers’ real wages did not change. As the supply of labor depends on real wage, people did not increase their demands for working.
Conclusion
While the taxation trends in the OECD and EU countries examined in the last few decades, it is clear that indirect taxes replaced many types of direct taxes such as sales, import and export taxes. According to IMF and World Bank, these taxes provided economic efficiency and macroeconomic stability in those countries. In the light of this observation, starting from 1980’s, IMF and World Bank suggested developing countries to rely more on indirect taxes and to make indirect tax reforms in their tax structures. In this way, developing countries could achieve higher growth rates, economic efficiency and social justice which are the important issues of a good tax policy. However, when these processes are examined, indirect tax reforms in developing countries seems far away from satisfying these issues.
When indirect tax reforms are analyzed in developing countries, three major problems appear. The first one is as a good tax system have to generate enough revenue to finance government expenditures, it is clear that indirect taxes could not achieve this aim. Especially, the large informal sectors and undeveloped financial sectors prevented countries to increase their growth rates and to increase government revenues. The second one is as an optimal tax policy provides economic efficiency, indirect taxes did the opposite. The major reasons seem as the large informal economies, missing risk markets, market failures in labor markets produced by indirect taxes, administrative and compliance costs created by indirect taxes in developing countries. The last one is as a good tax policy tries to provide equality and fairness to the society, indirect taxes created benefits more for rich people and were unable to decrease unemployment.
In conclusion, using indirect tax reforms in developing countries did not create successful results as they did in OECD and EU countries. In other words, as Heady (2002) argued, because OECD countries differ from developing countries with their size
of agricultural and informal sectors, unemployment levels and tax administration capabilities, taxes that work well in OECD countries do not necessarily work in
developing countries. Hence, advising developing countries to blindly follow the lead of OECD countries is not appropriate. Instead, each country primarily has to detect its own strength and weaknesses. Afterward, by comparing the advantages and the disadvantages of both direct and indirect taxes, developing countries have to establish an optimal tax structure which is mixed of both taxes and which would be more useful for providing fairness, economic efficiency and increased revenue.
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