The Consequences of the Value-Added Tax on Inequality

Arbeitspapier

This paper examines the impact of the introduction of the value-added tax on inequality and government revenues using newly released macro data. We present both conventional county fixed effect regressions and instrumental variable analyses, where VAT adoption is instrumented using the previous values of neighbouring countries VAT systems as an instrument. The results reveal – in contrast to earlier work – that the revenue consequences of the VAT have not been positive. The results indicate that income-based inequality has increased due to the VAT adoption, whereas consumption inequality has remained unaffected.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 6318

Classification and Topics

• Classification: Wirtschaft ; Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies ; Fiscal and Monetary Policy in Development
• Subject: tax policy ; value-added tax ; inequality ; developing countries

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Alavuotunki, Kaisa ; Haapanen, Mika ; Pirttilä, Jukka
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2017

Further information

• Handle: http://hdl.handle.net/10419/155560
• Last update: 10.03.2025, 11:43 AM CET