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.
|Date of creation:||01 Jun 2007|
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paper0716, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
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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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