Remittances, Value Added Tax and Tax Revenue in Developing Countries
AbstractThis paper examines the impact of international remittances on both the level and the instability of government tax revenue in receiving countries. It investigates in particular whether the presence of a value added tax (VAT) system increases the benefit of the inflows of remittances in terms of high and less volatile tax revenue ratio. This is supported by the fact that remittances are largely used for consumption purposes and contribute to smoothing private consumption. Using a large sample of developing countries observed over the period 1980-2006, and even after factoring in the endogeneity of remittances and VAT adoption, the results highlight that remittances significantly increase both the level and the stability of government tax revenue ratio in receiving countries that have adopted the VAT.
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Date of creation: 05 Jan 2011
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Remittances; VAT; Tax revenue; Tax Revenue Instability;
Other versions of this item:
- Christian EBEKE, 2010. "Remittances, Value Added Tax and Tax Revenue in Developing Countries," Working Papers 201030, CERDI.
- O23 - Economic Development, Technological Change, and Growth - - Development Planning and Policy - - - Fiscal and Monetary Policy in Development
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
- F20 - International Economics - - International Factor Movements and International Business - - - General
- H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
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.:
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Discussion Papers (REL - Recherches Economiques de Louvain)
2011044, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
- Christian Hubert Ebeke, 2011. "Remittances, Countercyclicality, Openness and Government Size," Recherches économiques de Louvain, De Boeck Université, vol. 77(4), pages 89-114.
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