Indonesia's Agriculture Tax: An Approach to the GTAP Model
Abstract
Tax is a policy tool to control the market. As Indonesia implied an agriculture tax of about 10% in 2014, it is worthy of capturing how it affects the market. This paper aims to find the effect of the implied tax on the market by seeing the country's sales, demand, imports, exports, and welfare. The method used is GTAP model simulation with the base of GTAP9 and aggregated based on the case applied. The result shows that the tax implied makes the demand, import, and export decrease even for the country that implements it. However, the sale and welfare gained by the origin country are increasing. Even China, the United States, and Australia have difficulty dealing with the policy as their welfare decreases. This research tries to find the effect of the agriculture tax that Indonesia implied in 2014. Using GTAP model simulation reveals how the tax affects the sale, demand, import, export, and gain or loss of welfare country.
Keywords
Full Text:
PDFReferences
Aguiar, A., Narayanan, B., & McDougall, R. (2016). An overview of the GTAP 9 data base. Journal of Global Economic Analysis, 1(1), 181–208. https://doi.org/10.21642/JGEA.010103AF
Aminu, A. (2019). A recursive dynamic computable general equilibrium analysis of value-added tax policy options for Nigeria. Journal of Economic Structures, 8(1), 1–38. https://doi.org/10.1186/s40008-019-0152-4
Barney, D. K., & Flesher, T. K. (2008). A study of the impact of special interest groups on major tax Reform: Agriculture and the 1913 income tax law. Accounting Historians Journal, 35(2), 71–100. https://doi.org/10.2308/0148-4184.35.2.71
Burfisher, M. E. (2011). Introduction to Computable General Equilibrium Models. New York: Cambridge University Press.
Carman, H. F. (1969). income tax planning for farmers. American Journal of Agricultural Economics, 51(5), 1543. https://doi.org/10.2307/1238044
Carman, H. F. (1972). Tax loss agricultural investments after tax reform. American Journal of Agricultural Economics, 54(4), 627. https://doi.org/10.2307/1238539
Chaudhry, M. G. (1999). The theory and practice of agricultural income tax in Pakistan and a viable solution. The Pakistan Development Review, 38(4II), 757–768. https://doi.org/10.30541/v38i4IIpp.757-768
Doye, D. C., & Boehlje, M. D. (1985). A flat rate tax: Impacts on representative hog and grain farms. Western Journal of Agricultural Economics, 16.
Eshete, Z. S., Mulatu, D. W., & Gatiso, T. G. (2020). CO2 emissions, agricultural productivity and welfare in Ethiopia. International Journal of Climate Change Strategies and Management, 12(5), 687–704. https://doi.org/10.1108/IJCCSM-07-2019-0046
Friman, A., & Hyytiä, N. (2022). The Economic and Welfare Effects of Food Waste Reduction on a Food-Production-Driven Rural Region.
Garcia, R. J., & Randall, A. (1994). A cost function analysis to estimate the effects of fertilizer policy on the supply of Wheat and Corn. Review of Agricultural Economics, 16(2), 215. https://doi.org/10.2307/1349464
Guither, H. D., & Uchtmann, D. L. (1978). Capital transfer taxes affecting agriculture: An international comparison. Illinois Agricultural Economics, 18(1), 21. https://doi.org/10.2307/1348798
Gulati, I. S., & Kothari, V. N. (1968). taxation of agriculture: Some basic issues. Economic and Political Weekly, 3(26/28), 1063–1064.
Halvorsen, R. (1991). The effects of tax policy on investment in agriculture. The Review of Economics and Statistics, 73(3), 393. https://doi.org/10.2307/2109563
Hanson, G. D., & Bertelsen, D. R. (1987). Tax reform impacts on agricultural production and investment decisions. American Journal of Agricultural Economics, 69(5), 1013. https://doi.org/10.2307/1242251
Hanson, G. D., & Eidman, V. R. (1985). Agricultural income tax expenditures. A Microeconomic Analysis. American Journal of Agricultural Economics, 67(2), 271. https://doi.org/10.2307/1240679
Haygood, T. F. (1949). Analyzing the tax load of agriculture. Journal of Farm Economics, 31(1), 668. https://doi.org/10.2307/1232887
Hertel, T. W. (1997). Global Trade Analysis: Modeling and Applications. Cambridge University Press.
Hertel, T. W., & Tsigas, M. E. (1988). Tax policy and U.S. agriculture: A general equilibrium analysis. American Journal of Agricultural Economics, 70(2), 289. https://doi.org/10.2307/1242069
Li, X., Yao, X., Guo, Z., & Li, J. (2020). Employing the CGE model to analyze the impact of carbon tax revenue recycling schemes on employment in coal resource-based areas: Evidence from Shanxi. Science of the Total Environment, 720, 137192. https://doi.org/10.1016/j.scitotenv.2020.137192
Long, J. E. (1990). Farming the Tax Code: The impact of high marginal tax rates on agricultural tax shelters. American Journal of Agricultural Economics, 72(1), 1. https://doi.org/10.2307/1243140
Milošević, G., Kulić, M., Durić, Z., & Durić, O. (2020). The taxation of agriculture in the republic of serbia as a factor of development of organic agriculture. Sustainability (Switzerland), 12(8). https://doi.org/10.3390/SU12083261
Nasim, A. (2012). Agricultural income taxation: Estimation of the revenue potential in Punjab. The Pakistan Development Review, 51(4), 321–335.Aminu, A. (2019). A recursive dynamic computable general equilibrium analysis of value-added tax policy options for Nigeria. Journal of Economic Structures, 8(1), 1–38. https://doi.org/10.1186/s40008-019-0152-4
Nguyen, H. T. T., Giang, L. T., & Pham, T. N. (2020). Impacts of higher tobacco tax on output and employment in Vietnam. Journal of Economics and Development, 22(1), 167–182. https://doi.org/10.1108/jed-11-2019-0058
Ojha, P. D. (1969). Taxation of agriculture: Some important issues. Economic and Political Weekly, 4(13), A59–A63.
Quatrebarbes, C. De, Laporte, B., & Calipel, S. (2021). Fighting the soaring prices of agricultural food products-VAT versus Trade tariffs exemptions. A case study in Niger. https://hal.archives-ouvertes.fr/hal-03164636/
Rosyadi, S. A., & Widodo, T. (2017). Impacts of Donald Trump's Tariff increase against China on global economy: Global Trade Analysis Project (GTAP) Model. Munich Personal RePEc Archive, (79439). taken from https://mpra.ub.uni-muenchen.de/79493/
Wilson, C. A., Featherstone, A. M., & Elffner, D. D. (2002). The Effects of a Federal Flat Tax on agriculture. Review of Agricultural Economics, 24(1), 160–180. https://doi.org/10.1111/1058-7195.00011
World Bank. (2018). Overview. Taken on 19 December 2018, from http://www.worldbank.org/en/country/indonesia/overview
DOI: http://dx.doi.org/10.17977/um002v14i12022p096
Refbacks
- There are currently no refbacks.
ISSN (Print) 2086-1575 ISSN (Online) 2502-7115
This work is licensed under a Creative Commons Attribution-NoDerivatives 4.0 International License.