Distribution Index for the Optimal Distribution of the New Sources of Tobacco Consumption Tax Revenue
Asian Tax Journal Vol. 7 No. 2 (2006), pp. 9-34
Abstract
When the tobacco industry ceases to exist from a perspective of the tobacco consumption tax, it would lead to the loss of the source of local taxes related to tobacco, which would drive local public finance into difficulties. Accordingly, it is necessary to develop the alternative source of taxation for local education tax related to the tobacco consumption tax. The amount of tobacco consumption taxes collected in 2003 accounted for 2,384,000million won and the amount of the local education tax related to it accounted for 1,192,100million won. Accordingly, the amount of tobacco-related local taxes accounted for 3,576,500million won. First, an attempt was made to present the plan to improve the alternative source of taxation for the tobacco consumption tax as follows: New establishment of the local consumption tax by the joint utilization method of the source of taxation. A given amount of the collected amount of value-added tax, the national tax, is distributed to each municipality in the form of the local consumption tax. The distribution indexes as the standard of its allocation could include the use of 1 the value-added tax amount, 2 the amount of value-added tax imposed on each category of business, 3 the tax base of the value-added tax, 4 the tax base of the value-added tax by category of business and the like. In case the standard of the 'distribution index' is selected by percentage error(PE), the mean value of PE shows the following order in it is selected in the descending order: 1 The standard of the value-added tax by locality of simplified taxpayers in service business (the mean value of PE:-0.022) 2 The standard of the tax base by locality of the retailing business as a whole(the mean value of PE: -0.023). 3 The standard of the tax base by locality of the simplified taxpayer of restaurant business (the mean value of PE:0.031) To increase the national tax, it has some limitation as it should meet several preconditions such as the raise of the value-added tax rate. the reduction of the value-added tax rate, the new establishment of the local consumption tax rate and the like.
Keywords
- tobacco consumption tax
- value-added tax
- percentage error(PE)