Melnyk Oleksandra

3d-year student of National university Kyiv-Mohyla academy, Ukraine

The analysis of actual fiscal trends of the world’s economies

The instability of the global economy, the world financial crisis and all its impact on the general state of the world’s economy have caused the need of lots of governments to stabilize all the domestic economies. A very important aspect for every government is the efficiency of local businesses and especially the ease of doing business. The easier it is to form new businesses, the more likely it is that new businesses will be formed and existing businesses will develop – creating value-added and jobs. One important way in which the government can improve the ease of doing business in an economy is by easing the burden of the tax system on firms.As soon as one of the most important ways in which the government can facilitate doing business is fiscal policy, tax reforms are pursued now all over the world.

Due to a lot of changes which has been already done most economies has come to a period of slow, gradual, but inconsistent recovery. It is not surprising therefore that with this volatile economic backdrop, the interest in the payments made by business and received by governments has become more intense and widespread. For example, in June last year to May 2012 in 31 countries have been simplified tax for small and medium businesses.

Taxes have historically been used as a policy instrument in a variety of ways, but with the continuing difficult economic environment, the tension between the need to raise tax revenues and at the same time to provide a system which encourages economic activity is increasing. Governments need to raise revenues to enable them to discharge their obligations to provide funding for infrastructure, education and public health, and in some cases there is still much to do to reduce the significant public deficits with persist. However, in a world which has now truly embraced globalisation, some governments also see a need to put in place tax systems which are seen to be effective, can help to attract investment, and in turn can help foster economic growth. A sensible business tax system is not just about attractive tax rates but also tax rules which are simple and easy to comply with. [1]

There are three main indicators of the ease of doing business: number of payments, time and Total Tax Rate for a firm. By the number of payments the frequency of filing and baying different types of taxes and contributions is indicated. The time indicator shows how lond does it take to prepare, file and pay profit taxes, consumption taxes, and labour taxes and mandatory contributions. The Total Tax Rate captures the tax cost (as a percentage of profit) payed by a firm.

The official report Paying taxes 2013 of PricewaterhouseCoopers and Doing business says that on average a company, which belongs to a segment of medium-sized businesses, pay taxes at a total rate of 44.7 per cent of the profit, makes 27.2 payments and spend 267 hours to fulfill all of their tax obligations. In 2011, the amount of time for tax reporting decreased by one 8-hour day, and the number of payments has dropped by almost half, while the total tax rate decreased by only 0.3 percent.

During the past eight years (2004-2012) the amount of time spent on tax reporting reduced on average to 54 hours, which is almost seven working days and the number of payments fell more than six times. The total tax rate each year declined by almost 1 percent, which gives in total an 8% declination since 2004. The number of payments made by a single business has fallen by 6,5.

The global world’s picture shows overall improvement but the rates of improvement vary from country to country and especially the main trends differ in different regions. It is not a surprise that the Middle East economies have the best Paying Taxes indicators. Economies of Central Asia & Eastern Europe have for now the worst results in both the time to comply (200 hours) and number of payments (22.2) and almost all countries from this region have the largest fall in the Total Tax Rate (12.6%). Africa has the highest number of payments (37.0), while North America has the lowest number (8.3). Time spent on tax reporting is the longest in South America (619 hours) and the least number of hours is spent in the Middle East (158 hours). Not surprisingly in Europe and North America the developed economies have the most efficient tax systems but in some countries Total Tax Rates are very high, due to numerous labour taxes and social contributions. The Asian Pacific economies have lower Total Tax Rates that the world average one.

The Economies with the easiest and the most difficult systems of paying taxes are demonstrated as the part of a global ranking on the ease of Paying Taxes [1].

Figure1: Economies with the easiest and the most difficult systems of paying taxes

Economy	Overall rank	Economy	Overall rank
United Arab Emirates	1	Camaroon	176
Qatar	2	Mauritania	177
Saudi Arabia	3	Senegal	178
Hong Kong SAR, China	4	Gambia, The	179
Singapore	5	Bolivia	180
Ireland	6	Central African Repablic	181
Bahrain	7	Congo, Rep.	182
Canada	8	Guinea	183
Kiribati	9	Chad	184
Oman	10	Venezuela, RB	185

A very important point in the process of creating a more favorable tax environment for business is that Governments should focus not only on the rate but also on minimizing the time and effort required to comply with tax obligations.

According to the results of economic analysis in countries where measures have been taken to simplify tax administration (both in terms of number of payments and the time required to resolve tax issues) were recorded higher economic growth rates.

One of the most effective ways of such indirect ‘tax-help’ for businesses is the introduction or improvement of systems completion and filing of tax returns in real time. Such payment online reduces the amount of paperwork and simplify the tax system and potentially help improve tax accounting procedures and reduce administrative costs. Over the past few years there has been a gradual decrease in the number of payments and the time that the average company spends on complying with tax obligations. Facilitation of tax administration, which occurs in all regions of the world, is a very positive development.

Literature:

1. Paying Taxes 2013 – The global picture. The official report of PricewaterhouseCoopers and Doing business. 2012

2. How can Tax Reform save the U.S. economy? Some influential economic thinkers offer their perspectives. International economy 2012