How to decline inequality: A taxation study on the luxury goods market

Anna Lozhnikova ,Natalia Kichko ,Yeqiang Xu ,Tatiana Ilina

doi:10.24294/jipd7279

Home - JIPD - Volume 8 - Issue 14

Submit to JIPD

Journal Browser

Volume | Year

Issue

• Current lssue

View All

News and Announcements

View All

How to decline inequality: A taxation study on the luxury goods market

Anna Lozhnikova

Natalia Kichko

Yeqiang Xu

Tatiana Ilina

Journal of Infrastructure Policy and Development 2024, 8(14), 7279; https://doi.org/10.24294/jipd7279

Submitted：21 Jun 2024

Accepted：25 Jul 2024

Published：04 Dec 2024

Download PDF(472.05KB)

XML

Abstract

This article investigates the income and expenditure patterns of individuals, with a specific focus on investments in luxury items, real estate, and expensive modes of transportation. Using global databases such as “Luxury Goods—Worldwide/Statista Market Forecast” and “Data—WID—World Inequality Database”, the authors explore the correlation between high demand for luxury items and economic inequality. The study emphasizes the role of luxury tax as essential for implementing a progressive personal income tax system in Russia. By examining country-specific factors, particularly in China and Russia, and conducting a comparative analysis of progressive tax systems globally, the research highlights the potential of luxury tax to enhance the efficacy of income tax in reducing inequality.

Keywords

References

Albert, M. (2009). Capitalism Against Capitalism. John Wiley & Sons.

Anderson, G. (2024). Minimum Wage by State (2024). Workforce.Com. Available online: https://workforce.com/news/minimum-wage-by-state-2022-all-you-need-to-know (accessed on 18 June 2024).

Australian Taxation Office. (2024). Tax Rates—Australian Resident. Available online: https://www.ato.gov.au/tax-rates-and-codes/tax-rates-australian-residents (accessed on 18 June 2024).

Audrey Millet. (2016). Luxury. A Rich History, Peter McNeil and Giorgio Riello, 2016. Fashion Without Fashion. https://doi.org/10.58079/d028

Beijing Municipal Bureau of Human Resources and Social Security. (2023). Notice of the Beijing Municipal Bureau of Human Resources and Social Security on the Adjustment of the Minimum Wage Standard in Beijing for the Year 2023. Available online: https://www.beijing.gov.cn/zhengce/zhengcefagui/202307/t20230714_3162838.html (accessed on 18 June 2024).

Berry, C. J. (2022). The Idea of Luxury: Revisited. Luxury, 9(2–3), 185–202. doi: 10.1080/20511817.2022.2183542

Canada Revenue Agency. (2023). Basic personal amount. Available online: https://www.canada.ca/en/revenue-agency/programs/about-canada-revenue-agency-cra/federal-government-budgets/basic-personal-amount.html (accessed on 18 June 2024).

Chongqing Municipal Finance Bureau. (2024). Policy Interpretation of the Decision of the Chongqing Municipal People’s Government on Amending the Interim Measures of Chongqing Municipality on Carrying Out the Pilot Reform of Property Tax on Part of Individual Houses and the Implementing Rules for the Administration of Property Tax on Individual Houses in Chongqing Municipality. Available online: https://www.cq.gov.cn/zwgk/zfxxgkml/zcjd_120614/bmjd/202401/t20240124_12859496.html (accessed on 18 June 2024).

Correio, B. (2024). Brazilian government to raise minimum wage. Available online: http://br.mofcom.gov.cn/article/jmxw/202401/20240103465033.shtml (accessed on 18 June 2024).

Directorate of Legal and Administrative Information (Prime Minister). (2024). What is the income tax scale? Available online: https://www.service-public.fr/particuliers/vosdroits/F1419 (accessed on 18 June 2024).

DITC Trade Newspaper. (2024). Australia’s minimum wage to rise to A$24.1 per hour. Available online: https://www.ccpit.org/a/20240607/202406073zrw.html (accessed on 18 June 2024).

EMARKETER. (2018). Luxury goods sales worldwide, by nationality, 2017 & 2024 (billions). EMARKETER. Available online: https://www.emarketer.com/chart/222528/luxury-goods-sales-worldwide-by-nationality-2017-2024-billions (accessed on 18 June 2024).

Fisman R, Wei S. Tax Rates and Tax Evasion: Evidence from “Missing Imports” in China. Journal of Political Economy. 2004; 112(2): 471–496. doi: 10.1086/381476

Huang, Y. (2008). Capitalism with Chinese Characteristics: Entrepreneurship and the State. Cambridge University Press.

India Briefing. (2024). Individual income tax in India. Available online: https://www.india-briefing.com/doing-business-guide/india/taxation-and-accounting/individual-income-tax (accessed on 18 June 2024).

Internal Revenue Code (IRC). (2024). Credits and deductions for individuals. Available online: https://www.irs.gov/credits-and-deductions-for-individuals (accessed on 18 June 2024).

Janet. (2024). France 2024 kicks off with a number of new laws on the way: Pay hikes. RFI. Available online: https://rfi.my/ADod (accessed on 18 June 2024).

McNeil, P., & Riello, G. (2016). Luxury: A Rich History. Oxford University Press.

Ministry of Industry and Trade of Russia. (2024). Lists of passenger cars. Available online: https://minpromtorg.gov.ru/docs/list/?pdfModalID=061e0f56-a746-4b34-a0ea-abf9df1a521a&fileModalID=899cd9a5-d80a-483c-a6d8-3c976321d372 (accessed on 18 June 2024).

Morgan Stanley. (2023). Chinese Buyers to Boost Luxury Goods Sector. Available online: https://www.morganstanley.com/ideas/china-luxury-sector (accessed on 18 June 2024).

Nelson, E. (2017). Thomas Piketty says that the US sets a bad example on inequality for the world. Available online: https://qz.com/1155448/thomas-piketty-says-the-us-is-setting-a-bad-example-on-inequality-for-the-world (accessed on 18 June 2024).

OECD. (2022). Consumption tax trends 2022: VAT/GST and excise, core design features and trends. Organization for Economic Co-operation and Development. https://doi.org/10.1787/6525a942-en

Peng, H. P., Chang, M. C. (2012). The foundations of Chinese attitudes towards advocating luxury spending. The European Journal of the History of Economic Thought, 19(5), 691–708. https://doi.org/10.1080/09672567.2010.540342

Piketty, T. (2017). Capital in the Twenty-First Century. Harvard University Press. https://doi.org/10.4159/9780674982918

PRC State Administration of Taxation (SAT). (2019). How to calculate vehicle purchase tax payable? Available online: https://www.chinatax.gov.cn/n810219/n810744/n4016641/n4171132/n4489945/c4490775/content.html (accessed on 18 June 2024).

Publications. (2024). Available online: https://luxurytheory.ru/publikatsii/ (accessed on 18 June 2024).

PWC. (2022). Brazil-Individual-Taxes on personal income. Available online: https://taxsummaries.pwc.com/brazil/individual/taxes-on-personal-income (accessed on 18 June 2024).

PWC. (2024). Germany-Individual-Taxes on personal income. Available online: https://taxsummaries.pwc.com/germany/individual/taxes-on-personal-income (accessed on 18 June 2024).

Ramos, A. (2011). Luxury, Crisis and Consumption: Sir James Steuart and the Eighteenth-Century Luxury Debate. History of Economics Review, 53(1), 55–72. https://doi.org/10.1080/18386318.2011.11682176

Remy, N., & Kim, A. (2014). Winning today’s globe-hopping and shopping Chinese luxury consumers | McKinsey. Available online: https://www.mckinsey.com/capabilities/growth-marketing-and-sales/our-insights/winning-todays-globe-hopping-and-shopping-chinese-luxury-consumers (accessed on 18 June 2024).

Russian Federal Tax Service Official. (2024). Russian Personal Income Tax. Available online: https://www.nalog.gov.ru/rn77/taxation/taxes/ndfl/ (accessed on 18 June 2024).

Russian Federation. (2024). Tax Code of the Russian Federation Article 361. Tax rates. Available online: https://www.consultant.ru/document/cons_doc_LAW_28165/74259166683667ce2b14c160952f1885c5b83961/ (accessed on 18 June 2024).

Shanghai Tax Authority. (2024). Personal Housing Property Tax Policy Explained. Available online: https://shanghai.chinatax.gov.cn/xwdt/ztzl/grsx/fwjy/fcsjd/202208/t463884.html (accessed on 18 June 2024).

Sing Tao. (2024). Canada’s federal minimum wage hiked to $17.3. Sing Tao Canada. Available online: https://www.singtao.ca/6605259/2024-03-12/news-%E5%8A%A0%E6%8B%BF%E5%A4%A7%E8%81%AF%E9%82%A6%E4%B8%8A%E8%AA%BF%E6%9C%80%E4%BD%8E%E5%B7%A5%E8%B3%87%E8%87%B317.3%E5%85%83/?variant=zh-hk (accessed on 18 June 2024).

State Administration of Taxation of China. (2019). Announcement of the State Administration of Taxation of China on the Issuance of Administrative Measures for Withholding and Payment of Individual Income Tax Returns (for Trial Implementation). Bulletin of the State Council of the People’s Republic of China. Available online: https://www.gov.cn/gongbao/content/2019/content_5386991.htm (accessed on 18 June 2024).

Statista. (2018). Russia: Luxury fashion market value 2014–2017. Statista. Available online: https://www.statista.com/statistics/857377/luxury-fashion-market-value-russia/ (accessed on 18 June 2024).

Statista. (2024a). Luxury goods-Russia | statista market forecast. Statista. Available online: https://www.statista.com/outlook/cmo/luxury-goods/russia (accessed on 18 June 2024).

Statista. (2024b). Luxury Goods-Worldwide | Statista Market Forecast. Statista. Available online: https://www.statista.com/outlook/cmo/luxury-goods/worldwide (accessed on 18 June 2024).

Statista. (2024c). Global: E-commerce retail sales CAGR 2024–2029. Available online: https://www.statista.com/forecasts/220177/b2c-e-commerce-sales-cagr-forecast-for-selected-countries (accessed on 18 June 2024).

TACC. (2024). The Average Price of a New Car in Russia in 2023 Increased to 3.7 Million Rubles. Available online: https://tass.ru/ekonomika/19697995 (accessed on 18 June 2024).

The company “ConsultantPlus”. (2024). Increasing coefficient on transport tax for individuals (2024), Acts, samples, forms, contracts, ConsultantPlus. Available online: https://www.consultant.ru/law/podborki/povyshayuschij_kojefficient_po_transportnomu_nalogu_dlya_fizicheskih_lic/ (accessed on 18 June 2024).

Timerkhanov, A. (2020). In 5 Years, New Car Prices in Russia Have Increased by 40%. Available online: https://www.autostat.ru/news/45077/ (accessed on 18 June 2024).

Trading Economics. (2024a). India national floor level minimum wage. Available online: https://tradingeconomics.com/india/minimum-wages (accessed on 18 June 2024).

Trading Economics. (2024b). Russia minimum wages. Available online: https://tradingeconomics.com/russia/minimum-wages (accessed on 18 June 2024).

UK government. (2024). Income tax rates and personal allowances. GOV.UK. Available online: https://www.gov.uk/income-tax-rates (accessed on 18 June 2024).

WID. (2024). Data. WID—World Inequality Database. Available online: https://wid.world/data/ (accessed on 18 June 2024).

Xinhua News Agency. (2018). Vehicle Acquisition Tax Law of the People’s Republic of China. Available online: https://www.gov.cn/xinwen/2018-12/30/content_5353497.htm (accessed on 18 June 2024).

Xinhua News Agency. (2023). Policy “combination punch” came, what new benefits of car purchase and use of the car. China Government Network. Available online: https://www.gov.cn/zhengce/202308/content_6898968.htm (accessed on 18 June 2024).

Xinhua News Agency. (2023). “Upward Evolution” Presses the Accelerator Button as Chinese Auto Brands Strive for the High-end Market. Available online: http://www.news.cn/auto/20231222/ed3d8ed86eb4427090136ef483842740/c.html (accessed on 18 June 2024).

Previous
article in this issue

Next
article in this issue