Is VAT the Best Way to Impose a General Consumption Tax in Developing Countries
AbstractIn this paper we discuss some recent critical literature on VAT in developing countries relating to its revenue productivity, its equity, and its impact on the development of the formal economy. Illustrating our argument with reference to two recent country studies (of Ukraine and Jamaica) we conclude that while there is merit in many of the criticisms that have been made, on the whole if a country needs a general consumption tax, as most developing countries do, then VAT is the one to have in almost all cases – although this conclusion certainly does not imply that the VAT already in force in most such countries is necessarily the ‘best’ VAT for their circumstances.
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Bibliographic InfoPaper provided by International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University in its series International Center for Public Policy Working Paper Series, at AYSPS, GSU with number paper0618.
Length: 37 pages
Date of creation: 01 May 2006
Date of revision:
Contact details of provider:
Web page: http://aysps.gsu.edu/isp/index.html
value-added tax; progressivity; informal economy; Ukraine; Jamaica;
Other versions of this item:
- Richard M. Bird, 2006. "Is VAT the Best Way to Impose a General Consumption Tax in Developing Countries?," International Tax Program Papers 0602, International Tax Program, Institute for International Business, Joseph L. Rotman School of Management, University of Toronto.
- H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
- H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
- O17 - Economic Development, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-08-19 (All new papers)
- NEP-PBE-2006-08-19 (Public Economics)
- NEP-PUB-2006-08-19 (Public Finance)
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- Michael Alexeev & Robert Conrad, 2009. "Assessment of Tax Reform Results in Russia: Comparative Analysis," Working Papers 0001, Gaidar Institute for Economic Policy, revised 2009.
- Jorge Martinez-Vazquez & Richard M. Bird, 2010. "Value Added Tax: Onward and Upward?," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1026, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
- Antonio David & Martin Petri, 2013. "Inclusive Growth and the Incidence of Fiscal Policy in Mauritius â€” Much Progress, But More Could be Done," IMF Working Papers 13/116, International Monetary Fund.
- Roy Bahl & Sally Wallace, 2007.
"From Income Tax to Consumption Tax? The Case of Jamaica,"
International Center for Public Policy Working Paper Series, at AYSPS, GSU
paper0712, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
- Roy Bahl & Sally Wallace, 2007. "From Income Tax to Consumption Tax?. The Case of Jamaica," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 63(3), pages 396-414, September.
- Jayati Ghosh, 2007. "Macroeconomics and Growth Policies," Policy Notes 2, United Nations, Department of Economics and Social Affairs.
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