The Increased Revenue from Finnish Corporate Income Tax in the 1990s

Tuomas Kosonen

No 421, Discussion Papers from VATT Institute for Economic Research

Abstract: In 2000, revenues from corporate income tax (CIT) in Finland were seven times higher than in 1994. We decompose the aggregate development of CIT revenues in a number of ways in order to establish what aspects of corporate taxation changed. We present the average effective tax rate for corporations as calculated from micro data. We also describe the development of CIT revenues using distributional analysis and the decomposition of the aggregate growth rate. Our analysis suggests that the substantial increase in CIT revenues was not related to any concurrent change in the Finnish corporate tax system. This phenomenon can be ascribed to a few large corporations, that have domicile in Finland. We also find that exceptional increase in the profits of large Finnish corporations explain much of the increase in CIT revenues. Finland can be seen as a case study since CIT revenues also increased in some other European countries in the 1990s.

Keywords: Tax revenue; corporate taxation; tax competition; Taxation; Verotus; Taxation and Social Transfers; Julkisen talouden rahoitus ja tulonsiirrot (search for similar items in EconPapers)
Date: 2007
New Economics Papers: this item is included in nep-pbe and nep-pub
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