How should financial intermediation services be taxed?

Ben Lockwood

No 1309, Working Papers from Oxford University Centre for Business Taxation

Abstract: This paper considers the optimal taxation of savings intermediation services in a dynamic general equilibrium setting, when the government can also use consumption, income and profit taxes. When 100% taxation of profit is available, taxes on services supplied to firms should be deductible from profit, implying the optimality of a VAT-type tax. As for the rate of tax, in the steady state, an optimal arrangement is to set it equal to the rate of tax on capital income, not consumption. In turn, the capital income tax is zero when the when an unrestricted profit tax is available, but in the more realistic case when such a tax is not available, this rate can be positive or negative, but generally different to the optimal rate of tax on consumption.

Keywords: financial intermediation services; tax design; banks; payment services (search for similar items in EconPapers)
JEL-codes: G21 H21 H25 (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-acc, nep-ban, nep-dge, nep-pbe and nep-pub
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Related works:
Working Paper: How Should Financial Intermediation Services be Taxed? (2011)
Working Paper: How Should Financial Intermediation Services be Taxed? (2010)
Working Paper: How Should Financial Intermediation Services be Taxed? (2010)
Working Paper: How should Financial Intermediation Services be Taxed? (2010)
Working Paper: How Should Financial Intermediation Services be Taxed? (2010)
Working Paper: How Should Financial Intermediation Services be Taxed? (2010)
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