Is VAT the Best Way to Impose a General Consumption Tax in Developing Countries?
AbstractIn this paper we discuss some recent critical literature on VAT in developing countries relating to its revenue productivity, its equity, and its impact on the development of the formal economy. Illustrating our argument with reference to two recent country studies (of Ukraine and Jamaica) we conclude that while there is merit in many of the criticisms that have been made, on the whole if a country needs a general consumption tax, as most developing countries do, then VAT is the one to have in almost all cases – although this conclusion certainly does not imply that the VAT already in force in most such countries is necessarily the ‘best’ VAT for their circumstances.
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Bibliographic InfoPaper provided by International Tax Program, Institute for International Business, Joseph L. Rotman School of Management, University of Toronto in its series International Tax Program Papers with number 0602.
Length: 28 Pages
Date of creation: Mar 2006
Date of revision:
value-added tax; progressivity; informal economy; Ukraine; Jamaica.;
Other versions of this item:
- Richard Bird & Pierre-Pascal Gendron, 2006. "Is VAT the Best Way to Impose a General Consumption Tax in Developing Countries," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0618, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
- H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
- H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
- O17 - Economic Development, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
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