From Income Tax to Consumption Tax?. The Case of Jamaica
Over the past decade, a number of countries have shifted to single-rate tax systems with broader bases and lower rates. In the U.S., there continues to be discussion of the merits of a consumption tax, and of base-broadening reforms to the income tax system. The objective of this paper is to demonstrate how, over time, a conventional income tax could be converted to a flat-rate consumption tax in a developing country. The value of this analysis, we hope, comes with the use of a real-world situation (Jamaica), which allows us to focus on the detail that determines the feasibility of transitioning to a flat-rate tax on consumption. Our main contribution is to show the conditions under which the switch can be revenue-neutral.
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Volume (Year): 63 (2007)
Issue (Month): 3 (September)
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References listed on IDEAS
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0602, International Tax Program, Institute for International Business, Joseph L. Rotman School of Management, University of Toronto.
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- Zodrow, George R. & McLure, Charles E. Jr., 1988. "Implementing direct consumption taxes in developing countries," Policy Research Working Paper Series 131, The World Bank.
- Ricardo Varsano & Kevin Kim & Michael Keen, 2006. "The "Flat Tax(es)"; Principles and Evidence," IMF Working Papers 06/218, International Monetary Fund.
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