From Income Tax to Consumption Tax?. The Case of Jamaica

Roy W. Bahl () and Sally Wallace

FinanzArchiv: Public Finance Analysis, 2007, vol. 63, issue 3, pages 396-414

Abstract: Over the past decade, a number of countries have shifted to single-rate tax systems with broader bases and lower rates. In the U.S., there continues to be discussion of the merits of a consumption tax, and of base-broadening reforms to the income tax system. The objective of this paper is to demonstrate how, over time, a conventional income tax could be converted to a flat-rate consumption tax in a developing country. The value of this analysis, we hope, comes with the use of a real-world situation (Jamaica), which allows us to focus on the detail that determines the feasibility of transitioning to a flat-rate tax on consumption. Our main contribution is to show the conditions under which the switch can be revenue-neutral.

Keywords: flat tax; consumption tax; tax policy (search for similar items in EconPapers)
JEL-codes: H2 H24 H3 (search for similar items in EconPapers)
Date: 2007

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