• Title/Summary/Keyword: subsidies and taxes

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The Effect of Leverage, Earning Management, Capital Intensity, and Inventory Intensity on Tax Aggressiveness of Manufacturing Companies in Indonesia

  • OKTAVIANI, Rachmawati Meita;PRATIWI, Yayang Eka;SUNARTO, Sunarto;JANNAH, Afifatul
    • The Journal of Asian Finance, Economics and Business
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    • v.8 no.7
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    • pp.501-508
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    • 2021
  • The largest source of revenue in Indonesia comes from the taxation sector. Taxes increase the state revenue, which the government utilizes for building public facilities and infrastructures, providing subsidies to the public, financing public interests, and so on. In addition to producing revenue, taxes may be used to promote economic stability. Thus, this study aims to examine and analyze the financial aspects of tax aggressiveness. The financial aspects include leverage, capital intensity, inventory intensity, and earning management. The population used in this study was manufacturing companies listed on the Indonesia Stock Exchange (IDX) for the 2016-2019 period. Data analysis was carried out based on Eviews, with a selected sample of 32 companies of four observation years. Therefore, the number of samples was 128. The results of this study revealed that the best estimation model to use is the Fixed Effect Model (FEM). This study proved that leverage and earning management had a positive and significant effect on tax aggressiveness. In contrast, capital intensity and inventory intensity did not affect tax aggressiveness. In addition, the result of this study is still far from perfect. It is, therefore, hoped that further research can add other variables to find better results.

Potential Impact of Timber Supply and Fuel-Wood on the Atmospheric Carbon Mitigation : A Carbon Cycle Modeling Approach (목재공급과 연료용 목재가 대기에 축적된 탄소저감에 미치는 잠재적 영향 : 탄소순환모형 접근법)

  • Lyon, Kenneth S.;Lee, Dug Man
    • Environmental and Resource Economics Review
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    • v.19 no.3
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    • pp.597-632
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    • 2010
  • There is general agreement that global warming is occurring and that the main contributor to this probably is the buildup of green house gasses, GHG, in the atmosphere. Two main contributors are the utilization of fossil fuels and the deforestation of many regions of the world. The burning of fossil fuels increases atmospheric carbon while the burning of fuel-wood reducing fossil fuel consumption along with its forest source maintain an atmospheric carbon level. The standing timber in the forests is a carbon sink, as are wood buildings and structures, and fossil fuel in the ground. This paper is designed to examine a number of current issues related to mitigating the global warming problem through forestry. For this purpose, we develop a modeling approach by integrating timber market, fossil fuel market and carbon cycling model. We use discrete time optimal control theory to identify optimal time paths, the laws of motion, and stationary stats solutions of endogenous variables in the model. On the basis of these results, we identify the optimal amounts of subsidies to be provided or taxes to be imposed by the regulatory agency to mitigate atmospheric carbon accumulation. We also present a numerical example to help illustrate the characteristics of variables in the model when the social cost for atmospheric carbon incrementally shifts upward. A surprising result is that the social cost function for atmospheric carbon has a very smaller impact on the optimal rotation period than previous literature suggested.

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Economic Growth and Renewable Resource: Specialization of Clean Activities

  • Hwang, Sanghyun
    • Environmental and Resource Economics Review
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    • v.21 no.3
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    • pp.627-681
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    • 2012
  • This paper starts with a model of monopolistic competition and endogenous growth, and it adds pollution as an input to production. Then I adopt environmental quality as a renewable resource used in production. I show that increasing returns due to specialization of clean activities as inputs can help lead to sustainable growth with no harm to environmental quality. I also compare and evaluate alternative policy combinations (i.e. taxes +subsidies) that correct two distortions from pollution and monopolistic competition. Finally, I find that, if the productivity of environment in final good production is not sufficiently enough, the number of clean goods tends to increase with more environmental concerns.

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Rapid Rural-Urban Migration and the Rural Economy in Korea (한국(韓國)의 급격(急激)한 이촌향도형(離村向都型) 인구이동(人口移動)과 농촌경제(農村經濟))

  • Lee, Bun-song
    • KDI Journal of Economic Policy
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    • v.12 no.3
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    • pp.27-45
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    • 1990
  • Two opposing views prevail regarding the economic impact of rural out-migration on the rural areas of origin. The optimistic neoclassical view argues that rapid rural out-migration is not detrimental to the income and welfare of the rural areas of origin, whereas Lipton (1980) argues the opposite. We developed our own alternative model for rural to urban migration, appropriate for rapidly developing economies such as Korea's. This model, which adopts international trade theories of nontraded goods and Dutch Disease to rural to urban migration issues, argues that rural to urban migration is caused mainly by two factors: first, the unprofitability of farming, and second, the decrease in demand for rural nontraded goods and the increase in demand for urban nontraded goods. The unprofitability of farming is caused by the increase in rural wages, which is induced by increasing urban wages in booming urban manufacturing sectors, and by the fact that the cost increases in farming cannot be shifted to consumers, because farm prices are fixed worldwide and because the income demand elasticity for farm products is very low. The demand for nontraded goods decreases in rural and increases in urban areas because population density and income in urban areas increase sharply, while those in rural areas decrease sharply, due to rapid rural to urban migration. Given that the market structure for nontraded goods-namely, service sectors including educational and health facilities-is mostly in monopolistically competitive, and that the demand for nontraded goods comes only from local sources, the urban service sector enjoys economies of scale, and can thus offer services at cheaper prices and in greater variety, whereas the rural service sector cannot enjoy the advantages offered by scale economies. Our view concerning the economic impact of rural to urban migration on rural areas of origin agrees with Lipton's pessimistic view that rural out-migration is detrimental to the income and welfare of rural areas. However, our reasons for the reduction of rural income are different from those in Lipton's model. Lipton argued that rural income and welfare deteriorate mainly because of a shortage of human capital, younger workers and talent resulting from selective rural out-migration. Instead, we believe that rural income declines, first, because a rapid rural-urban migration creates a further shortage of farm labor supplies and increases rural wages, and thus reduces further the profitability of farming and, second, because a rapid rural-urban migration causes a further decline of the rural service sectors. Empirical tests of our major hypotheses using Korean census data from 1966, 1970, 1975, 1980 and 1985 support our own model much more than the neoclassical or Lipton's models. A kun (county) with a large out-migration had a smaller proportion of younger working aged people in the population, and a smaller proportion of highly educated workers. But the productivity of farm workers, measured in terms of fall crops (rice) purchased by the government per farmer or per hectare of irrigated land, did not decline despite the loss of these youths and of human capital. The kun having had a large out-migration had a larger proportion of the population in the farm sector and a smaller proportion in the service sector. The kun having had a large out-migration also had a lower income measured in terms of the proportion of households receiving welfare payments or the amount of provincial taxes paid per household. The lower incomes of these kuns might explain why the kuns that experienced a large out-migration had difficulty in mechanizing farming. Our policy suggestions based on the tests of the currently prevailing hypotheses are as follows: 1) The main cause of farming difficulties is not a lack of human capital, but the in­crease in production costs due to rural wage increases combined with depressed farm output prices. Therefore, a more effective way of helping farm economies is by increasing farm output prices. However, we are not sure whether an increase in farm output prices is desirable in terms of efficiency. 2) It might be worthwhile to attempt to increase the size of farmland holdings per farm household so that the mechanization of farming can be achieved more easily. 3) A kun with large out-migration suffers a deterioration in income and welfare. Therefore, the government should provide a form of subsidization similar to the adjustment assistance provided for international trade. This assistance should not be related to the level of farm output. Otherwise, there is a possibility that we might encourage farm production which would not be profitable in the absence of subsidies. 4) Government intervention in agricultural research and its dissemination, and large-scale social overhead projects in rural areas, carried out by the Korean government, might be desirable from both efficiency and equity points of view. Government interventions in research are justified because of the problems associated with the appropriation of knowledge, and government actions on large-scale projects are justified because they required collective action.

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