As from theoretical construct and empirical literature, i have found that tax base is defined as - tax revenue divided by tax rates. if the standard data on tax rates are not readily available, than how we can estimate tax base for central and state level ?? What could be the other suitable proxies for measurement of tax base ??
You can use expert estimation. Depending on your exact work use can use different estimations to realize a more complex, scenarios-based approach.
Tax Liability = Tax Base x Tax Rate
Tax base = Tax Liability / Tax Rate
1. If the tax rate is not known, how can we estimate tax base for central and tax?
In this question, we are given knly the tax liability amount, tax base is simply Tax base = Tax Liability / Tax Rate. To ask how much is for the state and how much is for the federal or central hovernment..... cannnot be answer. It is a simple algebra with three variable. Two variable must be known in order to find the unknown ghird variable. If among ghree variables, only kne variable is known (tax base) but both tax rates for state and central is not know, the problem cannit be solved without further facts, i.e. known most recent central tax rate and comparable state rate. The question is not "well-formed."
What could be the other suitable proxies for measurement of tax base?
In general EBITA is the base from which tax is calculated, i.e. net profit. If thre is any special tax treagment such as partial reduction or exemption, such treatment will come after net profit. Both state and federeal or central tax calculations would use EBITA as the base to multiply their tax rate (in general case).
You may visit website of RBI, and CSO-MOSPI, and Registrar of Companies, many useful data & inputs are available.
Sunil B. Kapadia I have visited RBI, CSO-Mospi and other governmental websites. But the main issue is that they have revenue data, not the rates. Therefore i have a problem.
Robert Kovács Paul Louangrath thanks sir for your suggestions. Will have look on it.
Conceptually at a macro level the tax base is the gdp or potential gdp of the central or state governments. Tax/gdp ratios show how much of the gdp is being taxed. U just need tax revenu and various measures of source gross income.
Sajjad Akhtar Thank you sir for your feedback. I have the data on GDP and SDPs.
In my understanding, there is a linear relationship between the Investment Portafolio and the Expenditure one. Centralized Economies depend more on social expending rather than investment. To measure a Tax Rate or Tributary Pressure , is quite a task because the GDP is difficult to estimate and ¨Taxes¨ are mostly based on consumption levels rather than Income. So, for starter, I suggest to structure very well a conceptual model based on the Total Output of those economies, and then divide it by the sum of both Portafolios. That will give you an ¨idea¨on the posible tax levels, on an specific time span.
Virgilio Malagon Thank you sir for your suggestions. I will try for it.
Hi, Yadawananda Neog. I usually consult these following webpages in studying effective tax rates:
https://www.cbo.gov/sites/default/files/115th-congress-2017-2018/reports/52419-internationaltaxratecomp.pdf
https://stats.oecd.org/Index.aspx?DataSetCode=CTS_ETR
I hope they would be helpful for you.
Hi! Yadawananda-Neog you can read this article!
National Tax Journal Vol 49 no. 4 (December 1996) pp. 535-52
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