Conflict, Legitimacy and Government Reform: Equitable Allocation of ...
Conflict, Legitimacy and Government Reform: Equitable Allocation of ...
Conflict, Legitimacy and Government Reform: Equitable Allocation of ...
Create successful ePaper yourself
Turn your PDF publications into a flip-book with our unique Google optimized e-Paper software.
60 KPI Congress XI<br />
the taxation system <strong>and</strong> improving the efficiency <strong>of</strong> the tax collection<br />
system with an aim to mitigate inequality.<br />
Second, the government must avoid a taxation system that will<br />
exacerbate inequality. Accordingly, available information clearly points<br />
out that if tax revenue is to be increased, we must avoid increasing<br />
indirect taxes but add new types <strong>of</strong> direct tax instead. Moreover, we must<br />
ponder about inheritance tax <strong>and</strong> property tax which aim to prevent<br />
people with a lot <strong>of</strong> assets from speculative hoarding. Such measure will<br />
impel people with a lot <strong>of</strong> assets to utilize these assets to boost<br />
productivity <strong>and</strong> create employment or provide opportunities to others<br />
who can utilize these assets as well. In Japan, if people who own a great<br />
deal <strong>of</strong> assets like l<strong>and</strong>s do not make any investment to generate revenue,<br />
they will not be able to keep the l<strong>and</strong> <strong>and</strong> have to sell them <strong>of</strong>f within<br />
three generations so as to pay inheritance tax, thus providing<br />
opportunities for further utilization by the people who bought such l<strong>and</strong>.<br />
Third, the government must try to abolish the subsidies that benefit<br />
the rich more than the poor.<br />
The findings <strong>of</strong> Harberger’s study (1974) assert that a fiscal policy<br />
comprising progressive taxes combined with public spending that<br />
benefits everyone can mitigate inequality, judging from declining genie<br />
coefficients as shown in Table 8. This study is applicable to both<br />
developed <strong>and</strong> developing countries.<br />
Table 8: Genie coefficients derived from different fiscal policies<br />
Calculated by Harberger, 1974<br />
Combo policies (both government<br />
revenue <strong>and</strong> spending sides)<br />
Developed<br />
countries<br />
Developing<br />
countries<br />
None 0.402 0.498<br />
Progressive tax + neutral expenditure budget 0.372 0.462<br />
Neutral tax + equitable expenditure budget 0.377 0.456<br />
Progressive tax + equitable expenditure<br />
budget<br />
0.347 0.419