Designing a Progressive VAT

Designing a Progressive VAT
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Volume/Issue: Volume 2024 Issue 078
Publication date: April 2024
ISBN: 9798400271830
$20.00
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Topics covered in this book

This title contains information about the following subjects. Click on a subject if you would like to see other titles with the same subjects.

Economics- Macroeconomics , Taxation - General , Economics / General , VAT incidence , VAT design , la Feria , stigma obstacle , VAT system , Value-added tax , Consumption taxes , Consumption , Income , Income distribution , Global

Summary

This paper presents a novel approach to addressing VAT regressivity, by proposing the adoption of a progressive VAT: a single-rate, broad-base, VAT, whereby tax paid on consumption is re-paid to lower income households in real-time, at the moment of purchase. Such a system can effectively eliminate regressivity, while minimizing the political economy, cash-flow, and welfare stigma obstacles that are often associated with standard welfare transfers used in modern VAT systems. It would also have other significant advantages, particularly in terms of compliance incentives.