Modelling Value-Added Tax in the Presence of Multiproduction and Differentiated Exemptions
We develop a framework for economy-wide modelling of value-added tax systems. Our framework models a number of complexities of VAT systems as they are implemented by tax agencies. In particular, we model multiple rates, multiple exemptions, multiple degrees of refundability across commodity users, and multi-product enterprises. A detailed VAT framework, such as that which we present in this paper, is important for correct modelling of VAT within a general equilibrium model. Such a framework is also of value in correctly calculating the distribution of indirect tax payments in CGE model databases, a prerequisite of accurate welfare impact calculations. We use the model to analyse the effects of simplifying Vietnam's complex VAT system. We simplify the system by moving from three tax rates to one budget-neutral rate, while also removing many discretionary exemptions. We find that the policy lifts real private consumption spending, our welfare measure, by an average of 0.9 per cent over our simulation period, 2008-2018.
|Date of creation:||Feb 2009|
|Date of revision:|
|Publication status:||Published in Journal of Asian Economics, 2010, Vol. 21(2), pp. 156-173.|
|Contact details of provider:|| Postal: |
Phone: 03 9919 1877
Web page: http://www.copsmodels.com/about.htm
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Jonathan Haughton & Shahidur R. Khandker, 2009. "Handbook on Poverty and Inequality," World Bank Publications, The World Bank, number 11985, August.
- Charles L. Ballard & John Karl Scholz & John B. Shoven, 1987.
"The Value-Added Tax: A General Equilibrium Look at Its Efficiency and Incidence,"
in: The Effects of Taxation on Capital Accumulation, pages 445-480
National Bureau of Economic Research, Inc.
- Charles Ballard & John Karl Scholz & John B. Shoven, 1987. "The Value-added Tax: A General Equilibrium Look at Its Efficiency and Incidence," NBER Chapters, in: Taxes and Capital Formation, pages 105-108 National Bureau of Economic Research, Inc.
- repec:cup:cbooks:9780521877657 is not listed on IDEAS
- Don Fullerton & Yolanda K. Henderson & John B. Shoven, 1982. "A Comparison of Methodologies in Empirical General Equilibrium Models of Taxation," NBER Working Papers 0911, National Bureau of Economic Research, Inc.
- Dixon, Peter B. & Parmenter, B. R. & Powell, Alan A., 1984. "The role of miniatures in computable general equilibrium modelling : Experience from ORANI," Economic Modelling, Elsevier, vol. 1(4), pages 421-428, October.
- Harrison, W Jill & Pearson, K R, 1996.
"Computing Solutions for Large General Equilibrium Models Using GEMPACK,"
Society for Computational Economics, vol. 9(2), pages 83-127, May.
- W. Jill Harrison & K.R. Pearson, 1994. "Computing Solutions for Large General Equilibrium Models Using GEMPACK," Centre of Policy Studies/IMPACT Centre Working Papers ip-64, Victoria University, Centre of Policy Studies/IMPACT Centre.
- Toh, Mun-Heng & Lin, Qian, 2005. "An evaluation of the 1994 tax reform in China using a general equilibrium model," China Economic Review, Elsevier, vol. 16(3), pages 246-270.
- Peter B. Dixon & Maureen T. Rimmer, 1999. "Changes in Indirect Taxes in Australia: A Dynamic General Equilibrium Analysis," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 32(4), pages 327-348.
- Kehoe, Timothy J. & Noyola, Pedro Javier & Manresa, Antonio & Polo, Clemente & Sancho, Ferran, 1988. "A general equilibrium analysis of the 1986 tax reform in Spain," European Economic Review, Elsevier, vol. 32(2-3), pages 334-342, March.
- Binh Tran-Nam, 2001. "Use and Misuse of Tax Compliance Costs in Evaluating the GST," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 34(3), pages 279-290.
- Sijbren Cnossen, 1998. "Global Trends and Issues in Value Added Taxation," International Tax and Public Finance, Springer, vol. 5(3), pages 399-428, July.
- Stephen Marks, 2005. "Proposed changes to the value added tax: implications for tax revenue and price distortions," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 41(1), pages 81-95.
- Gottfried, Peter & Wiegard, Wolfgang, 1991. "Exemption versus zero rating : A hidden problem of VAT," Journal of Public Economics, Elsevier, vol. 46(3), pages 307-328, December.
- International Monetary Fund, 2007. "Vietnam; Statistical Appendix," IMF Staff Country Reports 07/386, International Monetary Fund.
When requesting a correction, please mention this item's handle: RePEc:cop:wpaper:g-182. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Horridge)
If references are entirely missing, you can add them using this form.