The Value-Added Tax; Its Causes and Consequences
Has the VAT proved, as its proponents claim, an especially effective form of taxation? To address this, this paper first shows that a tax innovation-such as the introduction of a VAT- reduces the marginal cost of public funds if and only if it also leads an optimizing government to increase the tax ratio. This leads to the estimation, on a large panel, of a system of equations describing the probability of VAT adoption and the revenue impact of the VAT. The sign of the revenue impact is generally ambiguous, but most countries that have adopted a VAT seem to have gained a more effective tax instrument in doing so.
|Date of creation:||01 Jul 2007|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (202) 623-7000
Fax: (202) 623-4661
Web page: http://www.imf.org/external/pubind.htm
More information through EDIRC
|Order Information:||Web: http://www.imf.org/external/pubs/pubs/ord_info.htm|
References listed on IDEAS
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.:
- Timothy Besley & Michael Smart, 2005.
"Fiscal restraints and voter welfare,"
LSE Research Online Documents on Economics
3769, London School of Economics and Political Science, LSE Library.
- Timothy Besley & Michael Smart, 2005. "Fiscal Restraints and Voter Welfare," STICERD - Political Economy and Public Policy Paper Series 06, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
- Dani Rodrik, 1996.
"Why Do More Open Economies Have Bigger Governments?,"
NBER Working Papers
5537, National Bureau of Economic Research, Inc.
- Dani Rodrik, 1998. "Why Do More Open Economies Have Bigger Governments?," Journal of Political Economy, University of Chicago Press, vol. 106(5), pages 997-1032, October.
- Rodrik, Dani, 1996. "Why do More Open Economies Have Bigger Governments?," CEPR Discussion Papers 1388, C.E.P.R. Discussion Papers.
- Joshua Aizenman & Yothin Jinjarak, 2008.
"The collection efficiency of the Value Added Tax: Theory and international evidence,"
The Journal of International Trade & Economic Development,
Taylor & Francis Journals, vol. 17(3), pages 391-410.
- Joshua Aizenman & Yothin Jinjarak, 2005. "The Collection Efficiency of the Value Added Tax: Theory and International Evidence," NBER Working Papers 11539, National Bureau of Economic Research, Inc.
- Aizenman, Joshua & Jinjarak, Yothin, 2005. "The collection efficiency of the value added tax: theory and international evidence," Santa Cruz Department of Economics, Working Paper Series qt42d103zh, Department of Economics, UC Santa Cruz.
- John Piggott & John Whalley, 1998.
"VAT Base Broadening, Self Supply, and The Informal Sector,"
NBER Working Papers
6349, National Bureau of Economic Research, Inc.
- John Piggott & John Whalley, 2001. "VAT Base Broadening, Self Supply, and the Informal Sector," American Economic Review, American Economic Association, vol. 91(4), pages 1084-1094, September.
- Keen, Michael, 2008.
"VAT, tariffs, and withholding: Border taxes and informality in developing countries,"
Journal of Public Economics,
Elsevier, vol. 92(10-11), pages 1892-1906, October.
- Michael Keen, 2007. "VAT, Tariffs, and withholding; Border Taxes and Informality in Developing Countries," IMF Working Papers 07/174, International Monetary Fund.
- John Thornton & Fabian Bornhorst & Sanjeev Gupta, 2008. "Natural Resource Endowments, Governance, and the Domestic Revenueeffort; Evidence From a Panel of Countries," IMF Working Papers 08/170, International Monetary Fund.
- Bovenberg, A.L., 1987. "Indirect taxation in developing countries : A general equilibrium approach," Other publications TiSEM adac046e-0845-4c4e-904a-5, Tilburg University, School of Economics and Management.
- Keen, Michael & Lockwood, Ben, 2006. "Is the VAT a Money Machine?," National Tax Journal, National Tax Association, vol. 59(4), pages 905-28, December.
- Wacziarg, Romain & Alesina, Alberto, 1998.
"Openness, Country Size and Government,"
4553014, Harvard University Department of Economics.
- Emran, M. Shahe & Stiglitz, Joseph E., 2005.
"On selective indirect tax reform in developing countries,"
Journal of Public Economics,
Elsevier, vol. 89(4), pages 599-623, April.
- M. Shahe Emran & Joseph E. Stiglitz, 2002. "On Selective Indirect Tax Reform in Developing Countries," International Trade 0210003, EconWPA.
- Keen, Michael & Smith, Stephen, 2006.
"VAT Fraud and Evasion: What Do We Know and What Can Be Done?,"
National Tax Journal,
National Tax Association, vol. 59(4), pages 861-87, December.
- Stephen Smith & Michael Keen, 2007. "VAT Fraud and Evasion; What Do We Know, and What Can be Done?," IMF Working Papers 07/31, International Monetary Fund.
- SÃ²nia MuÃ±oz & Stanley Sang-Wook Cho, 2003. "Social Impact of a Tax Reform; The Case of Ethiopia," IMF Working Papers 03/232, International Monetary Fund.
- Edwards, Jeremy & Keen, Michael, 1996.
"Tax competition and Leviathan,"
European Economic Review,
Elsevier, vol. 40(1), pages 113-134, January.
- repec:cup:cbooks:9780521877657 is not listed on IDEAS
- Agha, Ali & Haughton, Jonathan, 1996. "Designing VAT Systems: Some Efficiency Considerations," The Review of Economics and Statistics, MIT Press, vol. 78(2), pages 303-08, May.
- A. Lans Bovenberg, 1987.
"Indirect Taxation in Developing Countries: A General Equilibrium Approach,"
IMF Staff Papers,
Palgrave Macmillan, vol. 34(2), pages 333-373, June.
- Ary Lars Bovenberg, 1986. "Indirect Taxation in Developing Countries; A General Equilibrium Approach," IMF Working Papers 86/1, International Monetary Fund.
- Atkinson, A. B. & Stiglitz, J. E., 1976. "The design of tax structure: Direct versus indirect taxation," Journal of Public Economics, Elsevier, vol. 6(1-2), pages 55-75.
- Kent Matthews, 2003. "VAT Evasion and VAT Avoidance: Is there a European Laffer curve for VAT?," International Review of Applied Economics, Taylor & Francis Journals, vol. 17(1), pages 105-114.
- Besley, Timothy & Jewitt, Ian, 1995. "Uniform taxation and consumer preferences," Journal of Public Economics, Elsevier, vol. 58(1), pages 73-84, September.
- Kent Matthews & Jean Lloyd-Williams, 2000. "Have VAT rates reached their limit?: an empirical note," Applied Economics Letters, Taylor & Francis Journals, vol. 7(2), pages 111-115.
- Glenn P. Jenkins & Hatice Jenkins & Chun-Yan Kuo, 2006. "Is the Value Added Tax Naturally Progressive?," Working Papers 1059, Queen's University, Department of Economics.
When requesting a correction, please mention this item's handle: RePEc:imf:imfwpa:07/183. 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: (Jim Beardow)or (Hassan Zaidi)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.