The Anatomy of the VAT
AbstractThis paper sets out some tools for understanding the performance of the value added tax (VAT). Applying a decomposition of VAT revenues (as a share of GDP) to the universe of VATs over the last twenty years, it emerges that developments have been driven much less by changes in standard rates than by changes in â€˜C-efficiencyâ€™ (an indicator of the departure of the VAT from a perfectly enforced tax levied at a uniform rate on all consumption). Decomposing C-efficiency into a â€˜policy gapâ€™ (in turn divided into effects of rate differentiation and exemption) and a â€˜complianceâ€™ gap (reflecting imperfect implementation), results pieced together for EU members suggest that the former are in almost all cases far larger than the latter, with rate differentiation and exemptions playing roles that differ quite widely across countries.
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Bibliographic InfoPaper provided by International Monetary Fund in its series IMF Working Papers with number 13/111.
Date of creation: 16 May 2013
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This paper has been announced in the following NEP Reports:
- NEP-ACC-2013-09-26 (Accounting & Auditing)
- NEP-ALL-2013-09-26 (All new papers)
- NEP-IUE-2013-09-26 (Informal & Underground Economics)
- NEP-PBE-2013-09-26 (Public Economics)
- NEP-PUB-2013-09-26 (Public Finance)
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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