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Progressivity and decomposition of VAT in the Mexican border, 2014

Author

Listed:
  • Luis Huesca

    (Centro de Investigación en Alimentación y Desarrollo)

  • Arturo Robles Valencia

    (Centro de Investigación en Alimentación y Desarrollo)

  • Abdelkrim Araar

    (Université Laval, Québec, Canada)

Abstract

We measure the general redistributive effect in the Mexican fiscal system and its northern border with two decomposition approaches. The novelty of this application lies in the use of non-parametric techniques and the fact that we did not assume any functional relationship among the variables in analysis. Our paper contributes with an assessment of the new 2014 fiscal reform according to the Value Added Tax (VAT) and its effects on the households. A tax-benefit system with relative progressivity but high HI effect is found as well as an increase on tax revenues up to 4 percent of GDP from VAT in the border as well. Our analytical method to decompose the total progressivity measured by the contributions of different tax sources from VAT, allow us to conclude which sort of products should or should not be taxed with the general rate.

Suggested Citation

  • Luis Huesca & Arturo Robles Valencia & Abdelkrim Araar, 2015. "Progressivity and decomposition of VAT in the Mexican border, 2014," Estudios Regionales en Economía, Población y Desarrollo. Cuadernos de Trabajo de la Universidad Autónoma de Ciudad Juárez. 25, Cuerpo Académico 41 de la Universidad Autónoma de Ciudad Juárez, revised 01 Jan 2015.
    • Handle: RePEc:cjz:ca41cj:25
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    References listed on IDEAS

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    Cited by:

    1. Sergio Lagunas Puls & Alejandra Almeida Baeza, 2019. "Significance analysis to the Value-Added Tax increments for the border region of Quintana Roo from 2003 to 2015," EconoQuantum, Revista de Economia y Finanzas, Universidad de Guadalajara, Centro Universitario de Ciencias Economico Administrativas, Departamento de Metodos Cuantitativos y Maestria en Economia., vol. 16(2), pages 43-64, Julio-Dic.

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    More about this item

    Keywords

    Value added tax; redistribution; vertical equity; horizontal inequity; non-parametric analysis;
    All these keywords.

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General

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