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Evaluación del Sistema Tributario Chileno y Propuesta de Reforma

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  • Pablo Serra

Abstract

This paper proposes the substitution of the current income tax system for a simplified consumption tax (SCT),consisting of a cash-flow tax (CST) with a rate of 26%, and a tax on wages with a maximum rate also of 26%. Preliminary estimates indicate that these taxes would maintain tax revenues constant while, at the same time, simplify the tax system and lower administrative and enforcement costs. Moreover, distortions would be diminished as an income tax would be replaced by a consumption tax. Vertical equality would not be significantly changed, but horizontal equality would improve. The paper also considers two alternatives to the CST: the hybrid tax and the tax on dividends, concluding that the second is the less attractive option.

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Bibliographic Info

Paper provided by Central Bank of Chile in its series Working Papers Central Bank of Chile with number 40.

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Date of creation: Dec 1998
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Handle: RePEc:chb:bcchwp:40

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  1. Don Fullerton & Gilbert E. Metcalf, 1997. "Environmental Taxes and the Double Dividends Hypothesis: Did You Really Expect Something for Nothing?," Discussion Papers Series, Department of Economics, Tufts University 9706, Department of Economics, Tufts University.
  2. Mintz, Jack M & Seade, Jesus, 1991. "Cash Flow or Income? The Choice of Base for Company Taxation," World Bank Research Observer, World Bank Group, vol. 6(2), pages 177-90, July.
  3. Eduardo Engel & Alexander Galetovic & Claudio Raddatz, 1998. "Taxes and Income Distribution in Chile: Some Unpleasant Redistributive Arithmetic," Documentos de Trabajo 41, Centro de Economía Aplicada, Universidad de Chile.
  4. Robert E. Hall & Alvin Rabushka, 1985. "The Route to a Progressive Flat Tax," Cato Journal, Cato Journal, Cato Institute, vol. 5(2), pages 465-480, Fall.
  5. Vito Tanzi & Parthasarathi Shome, 1993. "A Primer on Tax Evasion," IMF Staff Papers, Palgrave Macmillan, vol. 40(4), pages 807-828, December.
  6. Martin Feldstein, 1999. "Tax Avoidance And The Deadweight Loss Of The Income Tax," The Review of Economics and Statistics, MIT Press, vol. 81(4), pages 674-680, November.
  7. Auerbach, Alan J, 1997. "The Future of Fundamental Tax Reform," American Economic Review, American Economic Association, vol. 87(2), pages 143-46, May.
  8. Vito Tanzi & Parthasrathi Shome, 1993. "A Primeron Tax Evasion," IMF Working Papers 93/21, International Monetary Fund.
  9. Agha, Ali & Haughton, Jonathan, 1996. "Designing VAT Systems: Some Efficiency Considerations," The Review of Economics and Statistics, MIT Press, vol. 78(2), pages 303-08, May.
  10. Joel Slemrod & Shlomo Yitzhaki, 1996. "The Costs of Taxation and the Marginal Efficiency Cost of Funds," IMF Staff Papers, Palgrave Macmillan, vol. 43(1), pages 172-198, March.
  11. Bagwell, Laurie Simon & Bernheim, B Douglas, 1996. "Veblen Effects in a Theory of Conspicuous Consumption," American Economic Review, American Economic Association, vol. 86(3), pages 349-73, June.
  12. Pecorino, Paul, 1993. "Tax structure and growth in a model with human capital," Journal of Public Economics, Elsevier, vol. 52(2), pages 251-271, September.
  13. Nancy L. Stokey & Sergio Rebelo, 1993. "Growth Effects of Flat-Rate Taxes," NBER Working Papers 4426, National Bureau of Economic Research, Inc.
  14. William M. Gentry & R. Glenn Hubbard, 1997. "Distributional Implications of Introducing a Broad-Based Consumption Tax," NBER Chapters, in: Tax Policy and the Economy, Volume 11, pages 1-48 National Bureau of Economic Research, Inc.
  15. Engen, Eric M. & Gravelle, Jane G. & Smetters, Kent, 1997. "Dynamic Tax Models: Why They Do the Things They Do," National Tax Journal, National Tax Association, vol. 50(3), pages 657-82, September.
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Cited by:
  1. Pablo Serra, 2000. "Fundamentos para una Reforma Tributaria en Chile," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 37(111), pages 299-322.

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