Informality, Consumption Taxes, and Redistribution

• 成果类型: Article
• 署名作者: Bachas, Pierre; Gadenne, Lucie; Jensen, Anders
• 署名单位: ESSEC Business School; University of London; London School Economics & Political Science; Queen Mary University London; Centre for Economic Policy Research - UK; Harvard University; National Bureau of Economic Research
• 刊物名称: REVIEW OF ECONOMIC STUDIES
• ISSN/ISSBN: 0034-6527
• DOI: 10.1093/restud/rdad095
• 发表日期: 2023
• 页码: 2604-2634
• 关键词: income-tax; taxation; program; REFORM; VAT

摘要

Can taxes on consumption redistribute in developing countries? Contrary to consensus, we show that taxing consumption is progressive once we account for informal consumption. Using household expenditure surveys in 32 countries, we proxy for informal consumption using the type of store where purchases occur. We establish that the budget share spent in informal stores steeply declines with income, so that richer households pay a substantially larger share of their income in taxes. Our findings imply that the widespread policy of exempting food from taxation is hard to justify on equity grounds in low-income countries.