Daniel Prinz

The purpose of this note is to provide policy makers an overview of relevant issues and feasible policy choices in setting health taxes, 2 with a specific focus on taxing tobacco, alcoholic drinks, and sugar-sweetened beverages (SSBs) in the context of rising inflation.

Knowledge Note

The purpose of this note is to provide policy makers an overview of an economic framework for setting health taxes, with a specific focus on taxing tobacco, alcoholic drinks, and sugar-sweetened beverages (SSBs).

Knowledge Note

Payroll taxes and employer social security contributions account for just under 40 percent of the tax wedge—the difference between before-tax and after-tax wages—in developed countries. Their importance is also increasing in developing countries but there is still untapped potential for revenue-raising efforts. There is a longstanding interest in understanding the impact of payroll tax policies on employment and wages. The standard approach in public finance suggests that the market-level responsiveness of labor supply and demand determine the employment and wage impacts and the incidence of payroll taxes. This approach typically assumes that firms passively accept market-level wages and so the incidence of the payroll tax will be homogeneous across firms and workers. Nevertheless, a growing number of studies highlight the role of firms in wage determination. This suggests that the incidence of tax policies can also vary between different firm types, which influences their welfare implications. Our recent study provides evidence that firms play an important role in the impact of payroll taxes on their workers and that different firms respond differently to payroll tax cuts. 

Article

Firm consolidations can have long-lasting impacts on workers' labour market outcomes. This column examines the consequences of firm takeovers for workers in the Netherlands. The results show that workers of firms targeted by takeovers experience heightened job loss, as well as reductions in employment and income. Takeover-induced job loss is driven by labour restructuring at consolidating firms. Over-placed workers who are paid more than expected based on their human capital and duplicative workers who have skills similar to the workers of the acquiring firm are especially impacted.

Article

Given the massive impact of the COVID-19 pandemic on public finances globally, it is little surprise that the IMF’s October 2021 forecasts of debt and debt servicing costs in sub-Saharan Africa are substantially higher than was projected in October 2019 (Figure 1). Many countries in sub-Saharan Africa may need to impose fiscal consolidation measures to enhance the sustainability of their public finances even before their economies have fully recovered from the pandemic. The need for higher public revenues is an opportunity for countries to make their tax systems more efficient and equitable, particularly through well-designed green taxes, property taxes and rationalised tax expenditures. Getting these reforms right will be essential to ensure they do not slow the recovery and that they are socially and politically acceptable.

Article

Carbon taxes have a number of desirable features for developing country governments. They would provide a price signal which would incentivise more sustainable investments, and would also raise tax revenues which are much-needed in many contexts. Crucially, these revenues would be administratively feasible to collect, and unlike in high-income countries, carbon taxes would be progressive too. Nonetheless, policymakers also need to grapple with risks that are more specific to developing economies, including more limited options for redistribution to compensate households and the possibility of substitution to traditional fuel sources that also bring environmental costs.

Observation

Twitter Thread

Taxes can be used to better align the private costs and benefits of motoring with the social costs and benefits. This report sets out some key issues and policy options for ‘green’ motor taxes in SSA. It provides an overview of the principles of motor taxation, describes the policy context in SSA, and discusses the potential for policy options that could improve existing tax systems in the region.

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IFS Report R197 | Presentation Video | Twitter Thread

Since Spring 2020, the COVID-19 pandemic has had significant impacts on the public finances of both developed and developing countries. Falls in revenues and increases in public expenditure have pushed up deficits and debts, posing a particular challenge for many countries in sub-Saharan Africa (SSA). After the debt relief of the 2000s, the 2010s saw public debt and debt-servicing costs grow substantially across the region, with the fiscal situation looking increasingly unsustainable in some countries even prior to the pandemic. This difficult context may be one reason why the scale of discretionary tax and spending policy measures undertaken in response to the pandemic has generally been much smaller than in high-income countries. This report sets out the trends and forecasts for budget deficits, debts and debt-servicing costs in SSA, and provides an overview of the issues and options for potential post-COVID-19 fiscal consolidation efforts.

Paper | Slides

IFS Report R193 | Presentation Video | OECD Development Matters Blog | Twitter Thread 1 | Twitter Thread 2

The early labor market impacts of the COVID-19 pandemic resulted in widespread disruption to livelihoods. Previous analysis showed that between April and July 2020, across a sample of 39 countries, an average of 34 percent of workers stopped work, 20 percent of employees experienced partial or no payments for work performed, and 9 percent changed jobs during the early part of the pandemic. This brief discusses how labor markets have evolved since the initial phase of the crisis in the spring and early summer of 2020. It uses harmonized data from high-frequency phone surveys (HFPS) conducted in 33 developing countries and provides information on the changing labor market impacts of the crisis in these countries from the initial phase of the pandemic in April 2020 through December 2020. 

Paper

World Bank JobsWatch Covid-19 Brief | World Bank Jobs Group Blog | World Bank Covid-19 High-Frequency Monitoring Dashboard

The economic crisis caused by the COVID-19 pandemic sharply reduced mobility and economic activity, disrupting the lives of people around the globe. This brief presents estimates on the crisis’ impact on labor markets in 39 countries based on high-frequency phone survey (HFPS) data collected between April and July 2020. Workers in these countries experienced severe labor market disruptions following the COVID-19 outbreak. 34 percent of respondents reported stopping work, 20 percent of wage workers reported lack of payment for work performed, 9 percent reported job changes due to the pandemic, and 62 percent reported income loss in their household. Measures of work stoppage and income loss in the HFPS are generally consistent with GDP growth projections in Latin America and the Caribbean but not in Sub-Saharan Africa, indicating that the phone survey data contributes valuable new information about the impacts of the crisis. Ensuring availability of such critical data in the future will require investments into statistical and physical infrastructure as well as human capital to set up Emergency Observatories, which can rapidly deploy phone surveys to inform decision makers.

Paper

World Bank JobsWatch Covid-19 Brief | World Bank Jobs Group Blog | World Bank Covid-19 High-Frequency Monitoring Dashboard

There is much debate, and nowhere more than in the US, about whether public services such as healthcare should be provided by private companies, which may offer greater efficiencies but which are more susceptible to moral hazard and adverse selection of consumers. This column uses evidence from a provision change in Texas to show that contracting healthcare provision out to private companies increased the level of care patients received, but increased overall costs for the government.

Article

With so much attention in recent months on potential changes to the ACA’s provisions for Medicaid and consumer subsidies, it is easy to overlook some of the most important innovations introduced into the individual markets by the ACA: risk adjustment and reinsurance. The functioning of risk adjustment and reinsurance are un-sexy, behind the scenes, technical matters, but these regulations are crucial to protecting consumers with pre-existing conditions in a competitive insurance market. Premium discrimination and guaranteed renewability tend to attract the most popular attention in terms of non-discrimination, but enforcing a policy of non-discrimination against the chronically ill would be difficult or impossible without risk adjustment.

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