Fiscal Drag as an Automatic Stability Tool, in the Case of New Regulation with Price Criteria in Automotive Sectors Special Consumption Tax (SCT)

Year 2017, Volume: 2 Issue: 2, 159 - 175, 31.12.2017

Abdurrahman Taraktaş , Canatay Hacıköylü

https://doi.org/10.30927/ijpf.335594

Cited By: 1

Abstract

Fiscal
drag is a result of real or nominal expanding economy and progressive taxation.
In general, individuals are forced to enter the upper tax bracket depending on
their increased income or expenditure. More tax burden can result in less
consumption. Fiscal drag, lack of spending or excessive taxation can cause the
economy to slow down. Traditional view suggests that fiscal drag may serve as a
natural automatic stabilizer to cool the economy. However, this view ignores
the supply side and in particular the potential effects of the high tax burden
on economy. This study examines the extent to which the expected automatic
stabilization function can be performed and the possible side effects on
economic balances and income distribution of fiscal drag in our country in the
case of new regulation with price criteria in automotive sectors Special
Consumption Tax (SCT).

Keywords

Fiscal Drag, Excessive Taxation, Automotive Sectors, Special Consumption Tax

Fiscal Drag as an Automatic Stability Tool, in the Case of New Regulation with Price Criteria in Automotive Sectors Special Consumption Tax (SCT)

Abstract

Fiscal
drag is a result of real or nominal expanding economy and progressive taxation.
In general, individuals are forced to enter the upper tax bracket depending on
their increased income or expenditure. More tax burden can result in less
consumption. Fiscal drag, lack of spending or excessive taxation can cause the
economy to slow down. Traditional view suggests that fiscal drag may serve as a
natural automatic stabilizer to cool the economy. However, this view ignores
the supply side and in particular the potential effects of the high tax burden
on economy. This study examines the extent to which the expected automatic
stabilization function can be performed and the possible side effects on
economic balances and income distribution of fiscal drag in our country in the
case of new regulation with price criteria in automotive sectors Special
Consumption Tax (SCT).

Keywords

Fiscal Drag, Excessive Taxation, Automotive Sectors, Special Consumption Tax

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