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The Ifo model for reducing value-added tax fraud: First pay, then reimburse

Author

Listed:
  • Hans-Werner Sinn
  • Rüdiger Parsche
  • Andrea Gebauer

Abstract

Prof. Sinn presented an Ifo proposal for modifying the current VAT system in which a prior tax deduction is only possible after remitting VAT to the tax authorities. This could be achieved, for example, via a system of intervening trust accounts of the vendor into which the customer pays the gross price. From this account the value-added tax would be paid directly to the responsible revenue office and the net invoice amount would be transferred to the vendor. The special advantages of this approach would be both a complete elimination of tax shortfalls via an elimination of carrousel transactions as well as an elimination of tax shortfalls from insolvency.

Suggested Citation

  • Hans-Werner Sinn & Rüdiger Parsche & Andrea Gebauer, 2004. "The Ifo model for reducing value-added tax fraud: First pay, then reimburse," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 57(02), pages 34-38, January.
    • Handle: RePEc:ces:ifosdt:v:57:y:2004:i:02:p:34-38
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    File URL: https://www.ifo.de/DocDL/ifosd_2004_2_6.pdf
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    References listed on IDEAS

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    1. Dieter Dziadkowski & Andrea Gebauer & W. Christian Lohse & Chang Woon Nam & Rüdiger Parsche, 2002. "Development of Recent VAT Revenues and Anticipated Fiscal Effects of Reform Proposals for VAT System," ifo Forschungsberichte, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 13.
    2. Hans-Werner Sinn & Willi Leibfritz & Alfons J. Weichenrieder, 1999. "ifo Vorschlag zur Steuerreform," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 52(18), pages 03-18, October.
    3. Chang Woon Nam & Rüdiger Parsche & Barbara Schaden, 2001. "Measurement of Value Added Tax Evasion in Selected EU Countries on the Basis of National Accounts Data," CESifo Working Paper Series 431, CESifo.
    4. Hans-Werner Sinn & Christian Holzner & Wolfgang Meister & Wolfgang Ochel & Martin Werding, 2002. "Active Welfare - A path to higher employment and growth," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 55(09), pages 03-52, May.
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    Cited by:

    1. Blankart Charles B, 2008. "Wege zu mehr Steuerehrlichkeit / Towards a Better Tax Compliance," ORDO. Jahrbuch für die Ordnung von Wirtschaft und Gesellschaft, De Gruyter, vol. 59(1), pages 63-90, January.

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    More about this item

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

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