SFeDu
of.211, Gorgoko St., 88 
Rostov-on-Don
Russia
344002
+7 (863) 250-59-54
This email address is being protected from spambots. You need JavaScript enabled to view it.
te@sfedu.ru

TERRA ECONOMICUS

The principles of taxation for digital economy


TERRA ECONOMICUS, , Vol. 20 (no. 2),

The paper deals with the principles of taxation in the context of an economy’s digitalization. The new Industrial revolution and digitalization are changing subjects of tax relations and the tax base, and, accordingly, the very ideas about the principles on which taxes should be built. In this regard, it is proposed to distinguish between a conditionally fixed and variable part in principles of taxation. The conditionally fixed part includes classical canons of benefit (the benefit principle) and solvency (the ability-to-pay principle), which have been widely recognized by many generations of scientists and practitioners. Their relative consistence is defined by the fact that the tax theory deals with the people’s behavior and human relations, but not with the production mode. The conditionally variable part includes principles, associated with minimizing costs of access to the tax base. In the context of digitalization, these are: obtaining secure digital information about business transactions in real time; digital algorithmization and automation of taxation; calculation and payment of taxes under smart contracts in accordance with economic policy’s imperatives of the state. They are conditional variables, because under the influence of technological progress, the tax base and conditions for minimizing the costs of its use are being transformed. It also was established that requirements for taxes and tax policy depend on the technologies’ life cycle. In its early stages, they need the most tax support. Such a support is more important for catching up countries than for advanced ones, since emerging economies do not have sufficient experience in promoting technological innovations, relevant institutions and high incomes, generated by mature technologies of previous generations. To stimulate new technologies, it is advisable to implement not only vertical (sectoral) measures (such as tax incentives for the microelectronics sector), but also horizontal (system-wide) and matrix (mixed) measures that take into account national and regional technological priorities.
Citation: Vishnevsky V.P., Goncharenko L.I., Dementiev V.V., Gurnak A.V. (2022). The principles of taxation for digital economy. Terra Economicus 20(2), 59–71 (in Russian). DOI: 10.18522/2073-6606-2022-20-2-59-71


Keywords: tax; principles of taxation; industrial revolution; digitalization; tax incentives; tax policy

JEL codes: H20, H30

References:
  • Блауг М. (2004). Методология экономической науки, или как экономисты объясняют. М.: Вопросы экономики, 416 с. [Blaug, M. (2004). The Methodology of Economics: Or, How Economists Explain. Moscow: Voprosy Ekonomiki, 416 p. (in Russian)].
  • Вишневский В. (2008). Принципы налогообложения: обоснование и эмпирическая проверка. Экономика Украины (10), 55–72. [Vishnevsky, V. (2008). Principles of taxation: Justification and empirical verification. Economy of Ukraine (10), 55–72 (in Russian)].
  • Вишневский В. (2019). Цифровая экономика в условиях четвертой промышленной революции: возможности и ограничения. Вестник Санкт-Петербургского университета 35(4), 606–627.[Vishnevsky, V. (2019). The digital economy in the context of the Fourth Industrial Revolution: Opportunities and limitations. St Petersburg University Journal of Economic Studies 35(4), 606–627(in Russian)]. DOI: 10.21638/spbu05.2019.406
  • Красильников О.Ю. (2007). Анализ интернет-экономики на микроуровне. Известия Саратовского университета. Новая серия. Серия Экономика. Управление. Право 7(2), 3–13. [Krasilnikov, O.(2007). Analysis of the Internet economy at the micro level. Izvestia of Saratov University. New series. Series: Economics. Management. Law 7(2), 3–13 (in Russian)].
  • Полтерович В.М. (2018). К общей теории социально-экономического развития. Часть 1. География, институты или культура? Вопросы экономики 11, 5–26. [Polterovich, V. (2018). Towards a general theory of socio-economic development. Part 1. Geography, institutions, or culture? Voprosy Ekonomiki (11), 5–26 (in Russian)]. DOI: 10.32609/0042-8736-2018-11-5-26
  • Стрелец И.А. (2009). Сетевые блага: новые возможности и проблемы для предпринимательства. Мир новой экономики 1(3), 5–11. [Strelets, I. (2009). Network benefits: new opportunities and challenges for entrepreneurship. The World of the New Economy 1(3), 5–11 (in Russian)].
  • Фостер Р. (1987). Обновление производства: атакующие выигрывают. М.: Прогресс, 272 с. [Foster, R.(1987). Innovation: The Attacker’s Advantage. Moscow: Progress Publ., 272 p. (in Russian)].
  • Allingham, G., Sandmo, A. (1972). Income tax evasion: A theoretical analysis. Journal of Public Economics 1(1), 323–338.
  • Atkinson, B., Stiglitz, J. (1976). The design of tax structure: Direct versus indirect taxation. Journal of Public Economics 6(1–2), 55–75.
  • Barros, M. (2019). Robots and tax reform: Context, issues and future perspectives. International Tax Studies 6, 2–6.
  • Bass, J. (2017). Digitalization and Taxation. In: Gupta, S., Keen, M., Shah, A., Verdier, G. (eds.) Digital Revolutions in Public Finance. Washington, DC: International Monetary Fund, pp. 25–56.
  • Chamley, C. (1986). Optimal taxation of capital income in general equilibrium with infinite lives. Econometrica 54, 607–622.
  • Dai, X. (2018). Toward a reputation state: The social credit system project of China. SSRN Electronic Journal. DOI: 10.2139/ssrn.3193577
  • Diamond, A., Mirrlees, J. (1971). Optimal Taxation and Public Production I: Production Efficiency. American Economic Review 61(1), 8–27.
  • Gupta, S., Keen, M., Shah, A., Verdier, G. (eds.) (2017). Digital Revolutions in Public Finance. Washington, DC: International Monetary Fund, 343 р.
  • Judd, K. (1985). Redistributive taxation in a simple perfect foresight model. Journal of Public Economics28, 59–83.
  • Kendrick, M. (1939). The Ability-to-Pay Theory of Taxation. The American Economic Review 29(1), 92–101.
  • Markham, S., Ward, S., Aiman-Smith, L., Kingon, A. (2010). The Valley of Death as context for role theory in product innovation. Journal of Product Innovation Management 27, 402–417. DOI: 10.1111/j.1540-5885.2010.00724.x
  • Mankiw, N., Weinzierl, M., Yagan, D. (2009). Optimal taxation in theory and practice. The Journal of Economic Perspectives 23(4), 147–174.
  • McCredie, B., Sadiq, K., Chapple, L. (2019). Navigating the fourth industrial revolution: Taxing automation for fiscal sustainability. Australian Journal of Management 44(4), 648–664. DOI: 10.1177/0312896219870576
  • Mirrlees, J. (1971). An exploration in the theory of optimum income taxation. Review of Economic Studies 38(2), 175–208.
  • Mirrlees, J. (1976). Optimal tax theory: A synthesis. Journal of Public Economics 6(4), 327–358.
  • Musgrave, R. (1959). The Theory of Public Finance: A Study in Public Economy. New York: McGraw-Hill Book Company, 628 pp.
  • Ramsey, F. (1927). A contribution to the theory of taxation. Economic Journal 37, 47–61.
  • Saez, E. (2013). Optimal progressive capital income taxes in the infinite horizon model. Journal of Public Economics 97, 61–74. DOI: 10.1016/j.jpubeco.2012.09.002
  • Schaefer, K. (2020). China’s corporate social credit system – Context, competition, technology and geopolitics. Research report. Trivium China, 95 p.
  • Schwab, K. (2017). The Fourth Industrial Revolution. World Economic Forum, 192 p.
  • Shafi, M., Molisch, A., Smith, P., Haustein, T., Zhu, P, De Silva, P., Tufvesson, F. (2017). 5G: A tutorial overview of standards, trials, challenges, deployment, and practice. IEEE Journal on Selected Areas in Communications 35(6), 1201–1221. DOI: 10.1109/JSAC.2017.2692307
  • Walker, H., Cohen, B. (1985). Scope Statements: Imperatives for evaluating theory. American Sociological Review 50(3), 288–301.
  • Zuboff, S. (2019). The age of surveillance capitalism. The fight for the future at the new frontier of power. London: Profile Books, 704 p.
Publisher: Southern Federal University
Founder: Southern Federal University
ISSN: 2073-6606