Tax Systems under Fiscal Adjustment: A Dynamic CGE Analysis of the Brazilian Tax Reform
AbstractThis paper uses a dynamic computable general equilibrium model (CGE) to analyze the macroeconomic and redistributive effects of replacing turnover and financial transaction taxes in Brazil by a consumption tax. In order to approximate Brazil's compliance with its fiscal adjustment targets, the proposed reform is subject to a non increasing path for the level of public debt. Despite an increase in the average consumption tax rate in the first years after the reform, a majority of individuals experienced an increase in their lifetime welfare. This result rejects the hypothesis that the on-going fiscal adjustment effort carried on by the Brazilian government was an obstacle to the implementation of a more efficient tax system.
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Bibliographic InfoPaper provided by International Monetary Fund in its series IMF Working Papers with number 05/142.
Date of creation: 01 Jul 2005
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-10-22 (All new papers)
- NEP-CMP-2005-10-22 (Computational Economics)
- NEP-DGE-2005-10-22 (Dynamic General Equilibrium)
- NEP-MAC-2005-10-22 (Macroeconomics)
- NEP-PBE-2005-10-22 (Public Economics)
- NEP-PUB-2005-10-22 (Public Finance)
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