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The Evolution of Potential VAT Revenues and C-Efficiency in Advanced Economies

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  • Mr. Junji Ueda

Abstract

To understand the cyclical movements of value-added tax (VAT) revenues in advanced economies, this paper analyzes changes in the C-efficiency ratio by decomposing it into changes in the compliance and policy gaps between 2000 and 2014. The results from a panel of EU member countries and Japan suggest that the cyclicality of C-efficiency is explained by the correlation of both gaps with the output gap. The cyclicality of the compliance gap appears to be short lived, and larger in countries with high compliance gaps. The cyclicality of the policy gaps largely reflects not changes in policy parameters, but rather, behavior-induced changes, notably in government consumption and, to a lesser degree, in the composition of household consumption.

Suggested Citation

  • Mr. Junji Ueda, 2017. "The Evolution of Potential VAT Revenues and C-Efficiency in Advanced Economies," IMF Working Papers 2017/158, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2017/158
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    Cited by:

    1. Nguyen, Trang Thi Thuy & Pham, Binh Thai & Prior, Diego & van Hemmen, Stefan, 2022. "Performance of tax simplification around the world: A panel frontier analysis," Socio-Economic Planning Sciences, Elsevier, vol. 80(C).
    2. Peter Morrow & Michael Smart & Artur Swistak, 2019. "VAT Compliance, Trade, and Institutions," CESifo Working Paper Series 7780, CESifo.
    3. Ali-Yrkkö, Jyrki & Koski, Heli & Kässi, Otto & Pajarinen, Mika & Valkonen, Tarmo & Hokkanen, Marja & Hyvönen, Noora & Koivusalo, Elina & Laaksonen, Jarno & Laitinen, Juha & Nyström, Enni, 2020. "The Size of the Digital Economy in Finland and Its Impact on Taxation," ETLA Reports 106, The Research Institute of the Finnish Economy.
    4. Karolina Konopczak & Aleksander Łożykowski, 2021. "Efekt fiskalny uszczelniania systemu podatkowego w Polsce: próba oszacowania w zakresie podatku CIT," Ekonomista, Polskie Towarzystwo Ekonomiczne, issue 1, pages 25-55.
    5. Francesco Berardini & Fabrizio Renzi, 2022. "Mind the Gap! The (unexpected) impact of COVID-19 pandemic on VAT revenue in Italy," Questioni di Economia e Finanza (Occasional Papers) 669, Bank of Italy, Economic Research and International Relations Area.
    6. Ristić Milica & Todorović Jadranka Đurović & Đorđević Marina, 2019. "Factors of the Value Added Tax Collection Efficiency in the Republic of Serbia," Economic Themes, Sciendo, vol. 57(1), pages 35-49, March.
    7. Serhan Cevik & Jan Gottschalk & Eric Hutton & Laura Jaramillo & Pooja Karnane & Mousse Sow, 2019. "Structural transformation and tax efficiency," International Finance, Wiley Blackwell, vol. 22(3), pages 341-379, December.
    8. Karolina Konopczak & Aleksander Łożykowski, 2021. "Efekt fiskalny uszczelniania systemu podatkowego w Polsce: próba oszacowania w zakresie podatku CIT," Ekonomista, Polskie Towarzystwo Ekonomiczne, vol. 1, pages 25-55, January.
    9. Santiago Acosta-Ormaechea & Atsuyoshi Morozumi, 2021. "The value-added tax and growth: design matters," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 28(5), pages 1211-1241, October.
    10. Avipsa Mohanty & Dinabandhu Sethi & Asit Ranjan Mohanty, 2022. "Does petroleum tax revenue drive sales tax effort of Indian states? A stochastic frontier approach," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 27(1), pages 1257-1268, January.
    11. Aleksandra L. Osmolovskaya-Suslina & Sofiia R. Borisova & Victoria A. Moskvina, 2021. "Integral Tax Collection Index as a New Approach to Assessing Tax Administration," Finansovyj žhurnal — Financial Journal, Financial Research Institute, Moscow 125375, Russia, issue 6, pages 54-80, December.
    12. Robert Kelm, 2022. "Determinants of the VAT Gap in EU Member States from 2000 to 2016," Central European Journal of Economic Modelling and Econometrics, Central European Journal of Economic Modelling and Econometrics, vol. 14(4), pages 225-262, December.
    13. Elena Sidorova & Ekaterina Sebechenko & Yury Kostyukhin & Diana Boboshko & Alexey Kostin & Olga Kostina & Natalia Vikhrova, 2021. "Formation of a Sustainable Mechanism of Preferential VAT Taxation of Exports as Evidenced by the Russian Federation Practice," Economies, MDPI, vol. 9(4), pages 1-21, December.
    14. Cyril Chimilila & Remidius Ruhinduka & Vincent Leyaro, 2023. "The design and revenue impact of a tax receipts lottery: A lab experiment in Tanzania," Discussion Papers 2023-02, University of Nottingham, CREDIT.

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