International Vat Harmonization: Economic Effects

By Jacob A. Frenkel, Steven A. Symansky, Assaf Razin

February 1, 1991

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Jacob A. Frenkel, Steven A. Symansky, and Assaf Razin. International Vat Harmonization: Economic Effects, (USA: International Monetary Fund, 1991) accessed December 21, 2024

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.

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

Keywords: Cash flow, Cash-flow tax, Consumption, Current account position, Discount factor, Europe, Global, Harmonization arise, Home country VAT, Income tax systems, Supply schedule, Tax revenue, Tax system, Terms of trade, Value-added tax, VAT harmonization, VAT HARMONIZATION, VAT system, WP

Publication Details

Pages:

48
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1991/022
Stock No:

WPIEA0221991
ISBN:

9781451921175
ISSN:

1018-5941

Notes

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

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