Tax competition in Switzerland【荐】.pptVIP

Titel / AutorIn / Datum Tax competition in Switzerland OECD – Fiscal Network Expert Meeting 2008 in Vienna Content Basic features of tax competition in Switzerland Effects of tax competition Mechanisms reducing tax competition 1. Basic features of tax competition in Switzerland Distribution of tax revenues accross levels of government 2005 High tax autonomy of Swiss cantons Revenue composition of cantons and municipalities 2005 Tax rate of cantons and municipalities Disparities in income tax rates 2. Effects of tax competition Empirical results for Switzerland Effects on tax base and tax revenues Tax rates are correlated with aggregate tax bases of cantons:?the lower the tax rate, the higher the aggregate tax base“ Tax rates generally are not correlated with tax revenues However, effects in specific cantons depend on the reaction of the tax base to changes in the tax rate (?tax rate elasticity of the tax base“):high elasticity ( -1) = tax base decreases by more than 1% when tax rate increases by 1%= tax revenues decrease when tax rate increaseslow elasticity ( -1)= tax base decreases by less than 1% when tax rate increases by 1%= tax revenues increase when tax rate increases Tax rates and aggregate tax bases of Swiss cantons Tax rates and tax revenues of Swiss cantons 3. Mechanisms reducing tax competition Mechanisms reducing tax competition Geographic location and economy:In large cities, tax rate elasticity of the tax base is usually low (-1)= reduction in the tax rate leads to a decrease in tax revenues Financial equalization systemFederal law on financial equalization: With resource equalization, standardized per capita tax revenues should reach 85% of Swiss average in every canton = reduces incentives to increase the tax base by reducing the tax rate = but the effect is much smaller than in the old system of financial equalization, where grants were positively correlated with a high tax rate! Income tax rates and tax bases 19