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Implementing Subnational Value Added Taxes on Internal Trade: The Compensating VAT (CVAT)

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  • Charles McLure

Abstract

Thispaper describes an ingenious and elegant scheme for implementinga destination-based value added tax (VAT) on cross-border tradewithin a nation or group of nations. Sales to local purchasers(registered traders, households, and unregistered traders) wouldbe subject to the local VAT, but sales to purchasers in otherstates would be zero-rated for state VAT and subject insteadto a ``compensating value added tax'' (CVAT). Credit would beallowed for tax on purchases by registered traders: for the localVAT on intrastate purchases and for the CVAT on interstate purchases. Copyright Kluwer Academic Publishers 2000

Suggested Citation

  • Charles McLure, 2000. "Implementing Subnational Value Added Taxes on Internal Trade: The Compensating VAT (CVAT)," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 7(6), pages 723-740, December.
  • Handle: RePEc:kap:itaxpf:v:7:y:2000:i:6:p:723-740
    DOI: 10.1023/A:1008785511498
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    References listed on IDEAS

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    1. Charles E. Mclure, 1987. "The Value Added Tax," Books, American Enterprise Institute, number 725195.
    2. Ring, Raymond J. Jr., 1999. "Consumers’ Share and Producers’ Share of the General Sales Tax," National Tax Journal, National Tax Association, vol. 52(n. 1), pages 79-90, March.
    3. Richard Bird & Pierre Gendron, 1998. "Dual VATs and Cross-Border Trade: Two Problems, One Solution?," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 5(3), pages 429-442, July.
    4. Charles McLure, 1999. "Electronic Commerce and the State Retail Sales Tax: A Challenge to American Federalism," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 6(2), pages 193-224, May.
    5. Richard Miller Bird, 1999. "Rethinking Subnational Taxes; A New Look At Tax Assignment," IMF Working Papers 99/165, International Monetary Fund.
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    Citations

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    Cited by:

    1. Robin Boadway, 2010. "The Design of a VAT for Multi-Government Jurisdictions: Lessons from Canada," Chapters,in: Fiscal Reforms in the Middle East, chapter 4 Edward Elgar Publishing.
    2. Sijbren Cnossen, 2002. "Tax Policy in the European Union: A Review of Issues and Options," CESifo Working Paper Series 758, CESifo Group Munich.
    3. Sijbren Cnossen, 2013. "Preparing the way for a modern GST in India," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 20(4), pages 715-723, August.
    4. Keuschnigg, Christian & Loretz, Simon & Winner, Hannes, 2014. "Tax Competition and Tax Coordination in the European Union: A Survey," Economics Working Paper Series 1427, University of St. Gallen, School of Economics and Political Science.
    5. Bird, Richard M. & Mintz, Jack M. & Wilson, Thomas A., 2006. "Coordinating Federal and Provincial Sales Taxes: Lessons From the Canadian Experience," National Tax Journal, National Tax Association, vol. 59(4), pages 889-903, December.
    6. Malinina, Tatiana, 2015. "Approaches to the Administration of Vat in the European Union and its Implications for the Customs Union," Published Papers mak15, Russian Presidential Academy of National Economy and Public Administration.
    7. Sijbren Cnossen & Erns Verwaal, 2001. "Europe`s new border taxes," CESifo Working Paper Series 434, CESifo Group Munich.
    8. Ricardo Varsano & Sergio Guimarães Ferreira & José Roberto Afonso, 2015. "Fiscal Competition: a Bird's Eye View," Discussion Papers 0114, Instituto de Pesquisa Econômica Aplicada - IPEA.
    9. José Sánchez Maldonado & Salvador Gómez Sala, 2006. "The Reform of Indirect Taxation in Spain: VAT and Excise," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0607, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    10. Horacio L. P. Piffano, 2007. "Argentina and Brazil: Fiscal Harmonization and Subnational Sales Taxation – State / Provincial VAT versus State / Provincial Retail Sales Tax," Department of Economics, Working Papers 069, Departamento de Economía, Facultad de Ciencias Económicas, Universidad Nacional de La Plata.

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    Keywords

    value-added tax; state sales tax;

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