On selective indirect tax reform in developing countries

• 成果类型: Article; Proceedings Paper
• 署名作者: Emran, MS; Stiglitz, JE
• 署名单位: George Washington University; George Washington University; Columbia University; Columbia University
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/j.jpubeco.2004.04.007
• 发表日期: 2005
• 页码: 599-623
• 关键词: tax reform; VAT; trade tax; Informal economy; welfare; government revenue

摘要

The current consensus on indirect tax reform in developing countries favors a reduction in trade taxes with an increase in VAT to raise revenue. The theoretical results on selective reform that underlie this consensus are, however, derived from partial models that ignore the existence of an informal economy. Once the incomplete coverage of VAT due to an informal economy is acknowledged, we show that, contrary to the current consensus, the standard revenue-neutral selective reform of trade taxes and VAT reduces welfare under plausible conditions. Moreover, a VAT base broadening with a revenue-neutral reduction in trade taxes may also reduce welfare. The results raise serious doubts about the wisdom of the indirect tax reform policies pursued by a large number of developing countries. (c) 2004 Elsevier B.V. All rights reserved.