The Evolution of Potential VAT Revenues and C-Efficiency in Advanced Economies

Junji Ueda

No 2017/158, IMF Working Papers from International Monetary Fund

Abstract: To understand the cyclical movements of value-added tax (VAT) revenues in advanced economies, this paper analyzes changes in the C-efficiency ratio by decomposing it into changes in the compliance and policy gaps between 2000 and 2014. The results from a panel of EU member countries and Japan suggest that the cyclicality of C-efficiency is explained by the correlation of both gaps with the output gap. The cyclicality of the compliance gap appears to be short lived, and larger in countries with high compliance gaps. The cyclicality of the policy gaps largely reflects not changes in policy parameters, but rather, behavior-induced changes, notably in government consumption and, to a lesser degree, in the composition of household consumption.

Keywords: WP; compliance gap; value-added tax; tax gap; tax compliance; C-efficiency ratio; elasticity of tax revenue; VAT revenue; revenue performance; VAT base; Tax efficiency; Consumption; Output gap (search for similar items in EconPapers)
Pages: 38
Date: 2017-07-11
References: Add references at CitEc
Citations: View citations in EconPapers (14)

Downloads: (external link)
http://www.imf.org/external/pubs/cat/longres.aspx?sk=45015 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:imf:imfwpa:2017/158

Ordering information: This working paper can be ordered from
http://www.imf.org/external/pubs/pubs/ord_info.htm

Access Statistics for this paper

More papers in IMF Working Papers from International Monetary Fund International Monetary Fund, Washington, DC USA. Contact information at EDIRC.
Bibliographic data for series maintained by Akshay Modi ().