What drives consumption tax revenues? electrónico disentangling policy and macroeconomic drivers by Hannah Simon & Michelle Harding
By: Simon, Hannah
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Contributor(s): Harding, Michelle.
Material type: 
TextSeries: OECD Taxation Working Papers 47.Publisher: [Paris] OECD [2020]Description: 57 p. gráf.Subject(s): IMPUESTO SOBRE EL CONSUMO | INGRESOS FISCALES | MACROECONOMIA | PRODUCTO INTERIOR BRUTO | TIPOS DE GRAVAMEN | CONSUMO | IMPUESTO SOBRE EL VALOR AÑADIDO | ECONOMETRIA | RECESIONES ECONOMICAS | ORGANIZACION DE COOPERACION Y DESARROLLO ECONOMICOOnline resources: Click here to access online Summary: This paper decomposes consumption tax revenues in OECD countries into the implicit tax rate (ITR) and consumption relative to GDP, to identify how economic downturns affect consumption tax revenues. It further considers the impact of changes in VAT efficiency and VAT rates on ITRs. The analysis finds that the observed stability in consumption tax revenues results from offsetting changes in the ITRs and in consumption as a share of GDP, arising from both macroeconomic changes and intentional policy
changes. During the economic crisis in 2007-2009, lasting changes in consumption patterns, notably increases in government spending and in private consumption of necessity goods, adversely affected the efficiency of VAT systems. These changes have not since been reversed, suggesting that consumption tax revenues are now less robust to economic shocks. Broadening the VAT base and narrowing the scope of reduced rates can help to stabilise consumption tax revenues during economic downturns.
| Item type | Current location | Home library | Call number | Status | Date due | Barcode |
|---|---|---|---|---|---|---|
| Recursos electrónicos | IEF | IEF | OL 1361 (Browse shelf) | Available | OL 1361 |
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This paper decomposes consumption tax revenues in OECD countries into the implicit tax rate (ITR) and consumption relative to GDP, to identify how economic downturns affect consumption tax revenues. It further considers the impact of changes in VAT efficiency and VAT rates on ITRs. The analysis finds that the observed stability in consumption tax revenues results from offsetting changes in the ITRs and in consumption as a share of GDP, arising from both macroeconomic changes and intentional policy
changes. During the economic crisis in 2007-2009, lasting changes in consumption patterns, notably increases in government spending and in private consumption of necessity goods, adversely affected the efficiency of VAT systems. These changes have not since been reversed, suggesting that consumption tax revenues are now less robust to economic shocks. Broadening the VAT base and narrowing the scope of reduced rates can help to stabilise consumption tax revenues during economic downturns.
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