Taxes in the initial benchmark
data
Markets | X Y W | CONS
------------------------------------------------------
PX | 100 -100|
PY | 100 -100|
PW | 200| -200
PL | -20 -60 | 100
PK | -60 -40 | 100
tax | -20 | 20
------------------------------------------------------
-
Taxes are negative entries in a column indicating
payments by a sector. SAM does not indicate what type of tax is in place: a tax
on output, on all the inputs, or on just one input.
- Corresponding positive entry
should indicate government revenue, but since no government in a simplified model
(the present case) the tax is redistributed as lump-sum to the consumer.
- A zero row sum for the tax
indicates that all tax receipts must be paid to someone.
Calibration
of benchmark tax on input
$PROD:X s:1
O:PX Q:100
I:PL Q: 20 P:2 A:CONS
T:TLX
I:PK Q: 60
if supplier
price of L (price received by the consumer) is 1, then buyer price (price paid
by the producer) is specified as (1 + t). The amount paid by the X sector to
labor (20) is equal to the
tax revenue (20) Þ tax rate is 100% (TLX = 1=-20/-20):
·
if
we set supplier price PL=1 (CONS is the supplier), then the price of labor for
buyers (sector X is the buyer) must be 1+t=2
·
if
the buyer price is unity, then the supplier price is PL=1/(1+t)=0.5
Note: when the benchmark price is not equal to unity, it
is necessary to add a reference
price. (The relative price of input (PL/P) fix
the marginal
rate of substitution on inputs. Benchmark reference prices and reference quantities are needed in order to
correctly fit
(calibrate)
the technology to the benchmark data. By default, the reference prices are
equal to unity in MPSGE.
Calibration of benchmark tax on output
$PROD:X s:1
O:PX Q:100
A:CONS
T:TX
I:PL Q: 20
I:PK Q: 60
if buyer price
(price paid by consumers) is 1, then supplier price of X (price received by producer)
is specified as (1 - t): Þ tax rate is 20% (TX =0.2=20/100).
Supplier price
equals to marginal cost of production in the long run: MC = PX(1-TX). No reference price redefinition is
necessary in the case of outputs.
Note: the output tax rate (to) will be different from the
corresponding tax rate on all inputs (ti), because
the tax base is different:
·
marginal
cost is the tax base for ti,
because MC(1+ti) = PX
·
PX
is the tax base for to, because MC =
PX(1-to)