Determinacy of the Optimal Structure of Tax Revenues Based on Risk and Return

Nasiroleslami, Ebrahim; Abbasian, Ezatollah

doi:10.29252/jemr.9.36.235

Volume 10, Issue 36 (6-2019) jemr 2019, 10(36): 235-256 | Back to browse issues page

‎ 10.29252/jemr.9.36.235

‎ 20.1001.1.22286454.1398.9.36.1.5

Mendeley

Zotero

RefWorks

Nasiroleslami E, Abbasian E. Determinacy of the Optimal Structure of Tax Revenues Based on Risk and Return. jemr 2019; 10 (36) :235-256
URL: http://jemr.khu.ac.ir/article-1-1693-en.html

Determinacy of the Optimal Structure of Tax Revenues Based on Risk and Return

Ebrahim Nasiroleslami ^*

¹, Ezatollah Abbasian²

1- BU-Ali Sina University , enasiroleslami@yahoo.com
2- University of Tehran

Abstract: (5231 Views)

The existence of a stable source of income for the government is crucial for the financing of current and development expenditures. The major revenues of the government in Iran are derived from two sources of tax and oil revenues. Given that much of the oil revenue fluctuations are outside the control of domestic policymakers, it is better to focus on tax revenues in order to earn relatively stable revenues. However, tax revenues are also affected by cycles of boom and recession, and in terms of economic downturns, it is also difficult to earn money from this source. Thus, the solution for this problem is that the total tax revenue of the country is considered as a portfolio of income and applied to the methods of the financial economics to optimize it, in this way, an optimal combination Tax will be specified. Accordingly, in this study, by collecting information on different government revenues during the period of 1350-1396 and using the Markovitz model from two approaches to minimize risk and maximize returns, the optimal contribution of different tax bases for Iran has been calculated. The results show that the current share of the tax revenue base of the country is different from the optimal share.

Keywords: Tax Income Structure, Markovitz Pattern, Optimal Portfolio, Sharp Ratio

Full-Text [PDF 2472 kb] (1464 Downloads)

Type of Study: Applicable | Subject: بخش عمومی
Received: 2018/04/22 | Accepted: 2019/08/8 | Published: 2019/09/24

References

1. Abbasian E, Jafari M, Nasiroleslami E, Farzaneh Mohammadi F. The Short and Long-run Elasticities of Tax Base Response to Business Cycles in Iran. jemr. 2017; 7 (28) :7-33 (in Persian).

2. Abrishami, H., Rahmani, T., Naseralaslami, E., (2012), Tax Revenue Diversification for Achieving the Stability of the Government's Revenue in Iran Based on the Portfolio Theory Approach, Quarterly Journal of Applied Economics Studies in Iran, Volume 1, Issue 3, Autumn 2012, PP: 1-26 (in Persian).

3. Akbari N, Sameti M, Samadi S, Nasr Esfahani R. Providing an Appropriate Model for Urban Public Sector Finance in Iran (Isfahan Municipality Case Study). jemr. 2010; 1 (1) :155-186(in Persian).

4. Asano, S and Fukushima, T., (2006), Some empirical evidence on demand system and optimal commodity taxation, The Japanese Economic Review, vol. 57, issue 1, 50-68. [DOI:10.1111/j.1468-5876.2006.00306.x]

5. Braun, B. M., (1988), Measuring tax revenue stability with implications for stabilization policy: a note. National Tax Journal, 41(4), 595-598.

6. Carroll, D. A., (2009), Diversifying municipal government revenue structures: Fiscal illusion or instability?. Public Budgeting & Finance, 29(1), 27-48. [DOI:10.1111/j.1540-5850.2009.00922.x]

7. Corlett, W.J., Hague, D.C. (1953). "Complementarity and the Excess Burden of Taxation." Review of Economic Studies, 21(1), pp. 21-30. [DOI:10.2307/2296257]

8. Dadgar,Y.,Nazari, R., Siami Eraghi, E., (2013), Optimum government and tax in public sector economics and in Iran, Quarterly Journal of Applied Economics Studies in Iran, Volume 2, Issue 5, Spring 2013, PP:1-27 (in Persian).

9. Ebeke, C., & Ehrhart, H. (2012), Tax revenue instability in Sub-Saharan Africa: Consequences and remedies. Journal of African Economies, 21(1), 1-27. [DOI:10.1093/jae/ejr026]

10. Engles, M., (2004), Portfolio Optimization: Beyond Markowitz. Master's thesis, Leiden University.

11. Garrett, T. A. (2009). Evaluating state tax revenue variability: a portfolio approach. Applied Economics Letters, 16(3), 243-246. [DOI:10.1080/13504850601018403]

12. Garvin, C. F. (1996). Financial Toolbox. For Use with MATLAB.

13. Harmon, Oskar Ragnar and Mallick, Rajiv, (1994), The Optimal State Tax Portfolio Model: An Extension, National Tax Journal, 47:2, pp. 395-401

14. López-Luzuriaga, Andrea; Scartascini, Carlos , (2019), Compliance spillovers across taxes: The role of penalties and detection, Journal of Economic Behavior and Organization 164 (2019) 518-534. [DOI:10.1016/j.jebo.2019.06.015]

15. Malkina M.Yu., Balakin R.V. Comparing Risk Components of Taxation Systems of Italy and the Russian Federation. Mediterranean Journal of Social Sciences, 2016, vol. 7, no. 1, pp. 45-53 [DOI:10.5901/mjss.2016.v7n1p45]

16. Malkina, MARINA,( 2017), Influence of the Industrial Structure of Economy on the Risk Level of Russian Regions' Tax Systems. Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, 65(6): 2025 - 2035. [DOI:10.11118/actaun201765062025]

17. Markowitz, H. (1959). Portfolio Selection: Efficient Diversification of

18. Investments. John Wiley & Sons, New York.

19. Misiolek, Walter and D. Grady Perdue (1987). "The Portfolio Approach to State and Local

20. Nazari A R, Fadaei I. Pathology of Iran's Tax System. quarterly journal of fiscal and Economic policies. 2014; 1 (4) :95-110 (in Persian).

21. Seegert, N. (2017). Optimal tax portfolios: An estimation of Government Tax Revenue Minimum-Variance Frontiers. [Online]. Available at: http://www. personal.umich.edu/~seegert/papers/OptimalTaxPortfolios_Seegert.pdf.

22. Sharpe, W. F. (1994), The Sharpe ratio, the journal of portfolio management, 21(1), 49-58. [DOI:10.3905/jpm.1994.409501]

23. Tax Structure." National Tax Journal 40(1):111-114.

24. Tjia, J. (2009). Building financial models. McGraw Hill Professional.

25. Yan, W. (2012). The impact of revenue diversification and economic base on state revenue stability. Journal of Public Budgeting, Accounting & Financial Management, 24(1), 58. [DOI:10.1108/JPBAFM-24-01-2012-B003]