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Effect Of The Change In Value Added Tax On The Fiscal Stability Of Kosovo

Author

Listed:
  • Gani Asllani

    (Professor at Law Faculty, University “Haxhi Zeka”, Peja, Kosovo)

  • Bedri Statovci

    (Economic Faculty, University “Haxhi Zeka”, Peja, Kosovo)

Abstract

The main goal of this paper is to analyse the effect of the change in tax rates for VAT for certain categories of goods on the fiscal stability of Kosovo. In Kosovo, VAT has been applied since 2001 and is an indirect tax on consumption that is the principal source of revenue to the state budget. The importance of this research paper is its focus on whether the changes made to the VAT rates in September 2015 have had positive or negative effects on some product prices, increasing or decreasing the state budget and the impact on the development of economic indicators expressed through GDP. The methodology of the paper is based on the comparative analysis of the data using both primary and secondary sources. The econometric model includes two variables and their relationships, independent variables, such as VAT, and dependent variables, like GDP. Through the econometric model and linear regression analysis for the period 2013-2016, the hypotheses have been tested with STATA application/software to calculate the impact of changes in the tax rate for VAT on the budget, economic growth and economic development. The results of the analysis show that the VAT reduction from 16% to 8% for basic products and the increase in VAT from 16% to 18% on luxury products had a positive effect on budget revenues and growth of GDP of Kosovo.

Suggested Citation

  • Gani Asllani & Bedri Statovci, 2018. "Effect Of The Change In Value Added Tax On The Fiscal Stability Of Kosovo," Ekonomski pregled, Hrvatsko društvo ekonomista (Croatian Society of Economists), vol. 69(4), pages 423-438.
    • Handle: RePEc:hde:epregl:v:69:y:2018:i:4:p:423-438
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    References listed on IDEAS

    as
    1. Bernd Genser, 2006. "The Dual Income Tax: Implementation and Experience in European Countries," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0625, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    2. International Finance Corporation & Multilateral Investment Guarantee Agency & World Bank, 2009. "A Handbook for Tax Simplification," World Bank Publications - Reports 28206, The World Bank Group.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    VAT rate; budget revenues; economic growth; taxation;
    All these keywords.

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • H6 - Public Economics - - National Budget, Deficit, and Debt

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