PhD Seminar (Econ)

Throwing horizontal equity out with the bathwater: Australian family payments for newborns from the Baby Bonus to Parental Leave Pay

Speaker: Matt Taylor

Date & Time: 9.30am–11.00am, Friday 08 November 2019

Venue: Acton Theatre Level 1, JG Crawford Building #132, Lennox Crossing, ANU

Abstract:

This paper examines the horizontal equity of Australia’s system of family payment for newborns. Using microsimulation modelling this research illustrates the higher levels of disposable household income that can be achieved by mothers eligible for Parental Leave Pay (PLP) compared to almost identical ineligible mothers. Under 2017-18 policy settings eligible mothers with private incomes between zero and $90,000 in the year following birth are able to achieve disposable incomes more than $5,000 greater, on average, relative to otherwise similar ineligible mothers. This income disparity amounts to 10-19% of the private income of ineligible mothers with private incomes under $47,000. The simulations demonstrate how recent reforms to family payments for newborns that reduced the generosity of maternity payments have made the extent of the horizontal inequity associated with PLP far more pronounced than it was at the time of its introduction in January 2011. The paper concludes with a discussion of whether the horizontal inequity that is inherent in a payment with eligibility determined by pre-birth employment, funded by taxpayers rather than the contributions of recipients, can be justified given PLP’s policy objectives.

Further information here.

 

ACDE Seminar

Improving SME tax compliance without increasing revenue? Evidence from Papua New Guinea

Speaker: Christopher Hoy

Date & Time: 2.00pm–3.30pm, Tuesday 12 November 2019

Venue: Griffin Room, #132 Crawford Building, Lennox Crossing, The ANU

Abstract:

‘Nudges’ have increased tax revenue in settings with high rates of compliance and effective enforcement, but can they work in countries that lack these conditions? The study tests this through a population-wide randomised control trial of small and medium sized enterprises (SMEs) in Papua New Guinea — a setting where no one has faced criminal charges for non-compliance and where 95 per cent of registered SMEs do not make the required monthly Salaries and Wages Tax (SWT) lodgements. The study tests the effectiveness of SMS messages that either remind SMEs of lodgement due dates or inform them about the public benefits from paying tax. Both treatments doubled on-time SWT lodgements by SMEs with no employees. However, this did not increase revenue, as sole-traders are exempt from paying SWT. These findings support seminal theories that propose taxpayers who face the lowest cost from complying are the most likely to respond to a nudge.

Further information here.

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