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The sources of VAT gaps in WAEMU: case studies on Benin and Burkina Faso

Author

Listed:
  • Romain Houssa

    () (CRED, University of Namur)

  • Kelbesa Megersa

    () (CRED, University of Namur)

  • Roukiatou Nikiema

    () (Ouaga II University)

Abstract

This paper examines the performance of the Value-Added Tax (VAT) in Benin and Burkina Faso since its introduction in the early 1990s. Both countries are witnessing a gradual rise in tax revenue over the study period. The paper also delivers a sectoral breakdown of inefficiencies in VAT-revenue collection in the two countries. We additionally decompose VAT gap in to ‘compliance gap’ and the ‘policy gap’. We find that the sectors responsible for ‘compliance gap’ are largely similar in the two countries. The gaps in VAT collection represent a considerable loss in potential tax revenue. Addressing them will support the ‘Domestic Resource Mobilization’ (DRM) efforts of the two countries.

Suggested Citation

  • Romain Houssa & Kelbesa Megersa & Roukiatou Nikiema, 2017. "The sources of VAT gaps in WAEMU: case studies on Benin and Burkina Faso," BeFinD Working Papers 0122, University of Namur, Department of Economics.
  • Handle: RePEc:nam:befdwp:0122
    as

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    File URL: http://www.befind.be/Documents/WPs/wp22
    File Function: First version, 2017
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    References listed on IDEAS

    as
    1. Edward Christie & Mario Holzner, 2006. "What Explains Tax Evasion? An Empirical Assessment based on European Data," wiiw Working Papers 40, The Vienna Institute for International Economic Studies, wiiw.
    2. Michael Keen, 2013. "The Anatomy of the Vat," National Tax Journal, National Tax Association;National Tax Journal, vol. 66(2), pages 423-446, June.
    3. Robin Boadway & Motohiro Sato, 2009. "Optimal Tax Design and Enforcement with an Informal Sector," American Economic Journal: Economic Policy, American Economic Association, vol. 1(1), pages 1-27, February.
    4. Keen, Michael & Smith, Stephen, 2006. "VAT Fraud and Evasion: What Do We Know and What Can Be Done?," National Tax Journal, National Tax Association;National Tax Journal, vol. 59(4), pages 861-887, December.
    5. Jorge Martinez-Vazquez & Richard M. Bird, 2011. "Value-Added Tax: Onward and Upward?," Chapters,in: The Elgar Guide to Tax Systems, chapter 6 Edward Elgar Publishing.
    6. Mattéo Godin & Romain Houssa & Kelbesa Megersa, 2017. "The Performance of VAT in DGD-partner countries," BeFinD Working Papers 0116, University of Namur, Department of Economics.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Value-Added Tax (VAT); Domestic Resources Mobilization (DRM); Tax Reform; Institutional Quality; Economic development;

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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