International Vat Harmonization: Economic Effects

Author/Editor:

Jacob A. Frenkel ; Steven A. Symansky ; Assaf Razin

Publication Date:

February 1, 1991

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

This paper highlights key macroeconomic issues related to VAT harmonization. A model is developed which emphasizes the effects of changes in the time profile of various taxes on international behavior. Dynamic simulations reveal that the macroeconomic and welfare implications of VAT harmonization, including conflicts of interest, depend critically on the tax system and the degree of substitution governing temporal and intertemporal allocations. We also demonstrate that the effects of revenue-neutral tax conversions between income and consumption tax systems undertaken by a single country depend critically on international differences in behavior.

Series:

Working Paper No. 1991/022

Subject:

Cash-flow tax Consumption Consumption taxes Income tax systems National accounts Revenue administration Taxes Value-added tax

Notes:

Also published in Staff Papers, Vol. 38, No. 4, December 1991.

English

Publication Date:

February 1, 1991

ISBN/ISSN:

9781451921175/1018-5941

Stock No:

WPIEA0221991

Pages:

48

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