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The Equity Impact of the Value-Added Tax in Bangladesh

Author

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  • Shahabuddin M. Hossain

    (International Monetary Fund)

Abstract

This paper investigates the income distributional implications of different value-added tax (VAT) schemes in Bangladesh. The results indicate that a revenue-neutral uniform VAT is regressive (relative to the pre-reform situation) in its impact on the income of different households. This paper explores the income distributional impact of an alternative policy package, consisting of a basic rate of VAT with exemptions and excise taxes for certain commodity groups, chosen on the basis of their distributional characteristics. The welfare consequences of the alternative package are found to be superior to those of the uniform VAT.

Suggested Citation

  • Shahabuddin M. Hossain, 1995. "The Equity Impact of the Value-Added Tax in Bangladesh," IMF Staff Papers, Palgrave Macmillan, vol. 42(2), pages 411-430, June.
  • Handle: RePEc:pal:imfstp:v:42:y:1995:i:2:p:411-430
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    Cited by:

    1. de Quatrebarbes, Céline & Boccanfuso, Dorothée & Savard, Luc, 2016. "Beyond representative households: The macro–micro impact analysis of VAT designs applied to Niger," Economic Modelling, Elsevier, vol. 57(C), pages 76-92.
    2. Dorothée Boccanfuso & Céline de Quatrebarbes & Luc Savard, 2011. "Can the removal of VAT Exemptions support the Poor? The Case of Niger," Cahiers de recherche 11-04, Departement d'Economique de l'École de gestion à l'Université de Sherbrooke, revised 05 Dec 2015.

    More about this item

    JEL classification:

    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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