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Using the Value Added Tax for Redistributive Purposes in Italy: Is it Still Worth?

Author

Listed:
  • Paolo Liberati
  • Federica Lanterna

    (University Roma Tre, Department of Economics)

Abstract

This paper shows that a Vat structure with multiple tax rates in Italy is not the most effective way to pursue redistributive aims. As the tax revenue of the Italian Vat is particularly affected by the use of reduced tax rates and exemptions, compared to other European countries, we suggest that a shift to a uniform Vat associated to cash transfers to households with children might better achieve redistributive targets on the neediest part of the population. This outcome could even be potentially improved by considering that a uniform Vat may significantly reduce Vat evasion due to the difference of tax rates applied to sales and purchases.

Suggested Citation

  • Paolo Liberati & Federica Lanterna, 2022. "Using the Value Added Tax for Redistributive Purposes in Italy: Is it Still Worth?," Departmental Working Papers of Economics - University 'Roma Tre' 0266, Department of Economics - University Roma Tre.
    • Handle: RePEc:rtr:wpaper:0266
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    File URL: https://economia.uniroma3.it/ricerca/pubblicazioni/working-papers/
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    More about this item

    Keywords

    Vat; Redistribution; Cash transfers; Italy;
    All these keywords.

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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