The Effects of the Value-Added Tax on Revenue and Inequality
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 country 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.
The Effects of the Value-Added Tax on Revenue and Inequality
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 country 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. Peer reviewed
Lyhyt vastaus Yläoutiselle, Ilmakunnakselle, Pursiaiselle ja Vartiaiselle
Vastaus ministeri Saarikon kommenttiin
Tässä kirjoituksessa kertaamme lyhyesti Talouspolitiikan arviointineuvoston vuoden 2022 raportin keskeisen sisällön ja kommentoimme ministeri Annika Saarikon puheenvuorossaan esiin nostamia seikkoja. Arvostamme suuresti sitä, että ministeri osallistui neuvoston raportin julkistusseminaariin sekä kiitämme häntä perustelluista huomioista. nonPeerReviewed
The Effects of the Value-Added Tax on Revenue and Inequality
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 country 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.