From Income Tax to Consumption Tax? The Case of Jamaica

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From Income Tax to Consumption Tax? The Case of Jamaica

Author Info

Roy Bahl () (Andrew Young School of Policy Studies, Georgia State University)
Sally Wallace () (Andrew Young School of Policy Studies, Georgia State University)

Abstract

Over the past decade, a number of countries have shifted to single rate tax systems with broader bases and lower rates. In the U.S. , there continues to be discussion of the merits of a consumption tax, and of base-broadening reforms to the income tax system. The objective of this paper is to demonstrate how, over time, a conventional income tax could be converted to a flat rate consumption tax in a developing country. The value of this analysis, we hope, comes with the use of a real world situation ( Jamaica ), which allows us to focus on the detail that determines the feasibility of transitioning to a flat rate tax on consumption. Our main contribution is to show the conditions under which the switch can be revenue neutral.

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Paper provided by International Studies Program, Andrew Young School of Policy Studies, Georgia State University in its series International Studies Program Working Paper Series, at AYSPS, GSU with number paper0712.

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Length: 30 pages
Date of creation: 01 Jun 2007
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Handle: RePEc:ays:ispwps:paper0712

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This paper has been announced in the following NEP Reports:

NEP-ALL-2008-01-05 (All new papers)
NEP-PBE-2008-01-05 (Public Economics)
NEP-PUB-2008-01-05 (Public Finance)

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

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. [Downloadable!]
Other versions:
- Richard Bird & Pierre-Pascal Gendron, 2006. "Is VAT the Best Way to Impose a General Consumption Tax in Developing Countries," International Studies Program Working Paper Series, at AYSPS, GSU paper0618, International Studies Program, Andrew Young School of Policy Studies, Georgia State University. [Downloadable!]
Dillon Alleyne & James Alm & Roy Bahl & Sally Wallace, 2004. "Tax Burden in Jamaica," International Studies Program Working Paper Series, at AYSPS, GSU paper0434, International Studies Program, Andrew Young School of Policy Studies, Georgia State University. [Downloadable!]
Sally Wallace & James Alm, 2004. "The Jamaican Individual Income Tax," International Studies Program Working Paper Series, at AYSPS, GSU paper0430, International Studies Program, Andrew Young School of Policy Studies, Georgia State University. [Downloadable!]
Zodrow, George R. & McLure, Charles E. Jr., 1988. "Implementing direct consumption taxes in developing countries," Policy Research Working Paper Series 131, The World Bank. [Downloadable!]

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