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Successful tax reform: the experience of value added tax in the United Kingdom and goods and services tax in New Zealand

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  • James, Simon
  • Alley, Clinton

Abstract

Tax reform provides many examples of failures - where reforms did not achieve their objectives successfully and sometimes even had to be reversed. However, value added tax (VAT) in the UK and goods and services tax (GST) in New Zealand have survived successfully for many years. This paper describes the nature and brief history of VAT and GST and then assesses the factors that contributed to their success. A key factor is the process of implementation both in allowing effective prior consultation to identify possible problems and improvements as well as preparing the taxpaying public for change. It is also important that the reform was seen to be fair, that there were gains as well as losses and the change was a net improvement. In assessing how the arguments for the introduction of VAT/GST turned out in practice, it is clear that this is a robust form of taxation and has been well able to accommodate the different political pressures in the UK and New Zealand.

Suggested Citation

  • James, Simon & Alley, Clinton, 2008. "Successful tax reform: the experience of value added tax in the United Kingdom and goods and services tax in New Zealand," MPRA Paper 19858, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:19858
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    File URL: https://mpra.ub.uni-muenchen.de/19858/1/MPRA_paper_19858.pdf
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    References listed on IDEAS

    as
    1. Zodrow,George R. & Mieszkowski,Peter (ed.), 2002. "United States Tax Reform in the 21st Century," Cambridge Books, Cambridge University Press, number 9780521803830.
    2. Evan Davis & John Kay, 1985. "Extending the VAT base: problems and possibilities," Fiscal Studies, Institute for Fiscal Studies, vol. 6(1), pages 1-16, February.
    3. Burchell, Stuart & Clubb, Colin & Hopwood, Anthony G., 1985. "Accounting in its social context: Towards a history of value added in the United Kingdom," Accounting, Organizations and Society, Elsevier, vol. 10(4), pages 381-413, October.
    4. Alan Richmond Prest, 1980. "Value Added Taxation," Books, American Enterprise Institute, number 591970, September.
    5. James, Simon & Edwards, Alison, 2008. "Developing Tax Policy in a Complex and Changing World," Economic Analysis and Policy, Elsevier, vol. 38(1), pages 35-53, March.
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    Cited by:

    1. James, Simon, 2012. "The contribution of behavioral economics to tax reform in the United Kingdom," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 41(4), pages 468-475.
    2. Jason L. Saving & Alan D. Viard, 2015. "Are income taxes destined to rise? the fiscal imbalance and future tax policy," Working Papers 1502, Federal Reserve Bank of Dallas.
    3. James, Simon, 2010. "Combining the contributions of behavioral economics and other social sciences in understanding taxation and tax reform," MPRA Paper 26289, University Library of Munich, Germany.
    4. Mohamad Ali Roshidi Ahmad & Zuriadah Ismail & Hazianti Abdul Halim, 2016. "Awareness and Perception of Taxpayers towards Goods and Services Tax (GST) Implementation," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 6(11), pages 75-94, November.

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    More about this item

    Keywords

    value added tax; goods and services tax; tax reform;
    All these keywords.

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General

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