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The effect of card payments on VAT revenue: New evidence from Greece

George Hondroyiannis () and Dimitrios Papaoikonomou ()

Economics Letters, 2017, vol. 157, issue C, 17-20

Abstract: The anticipated positive effect of card payments on VAT revenue performance has eluded empirical confirmation. The case of Greece provides a unique study ground, as the imposition of restrictions on cash withdrawals in July 2015 triggered a surge in card payments and in VAT revenue. Applying time-varying coefficient methods to Greek data during 2003q4–2016q2 we find that (i) a 1pp increase in the share of card payments in private consumption results in approximately 1% higher revenue through increased compliance; (ii) lowering the VAT rate can generate revenue gains; (iii) card transactions may facilitate tax buoyancy.

Keywords: VAT; Card payments; Time-varying coefficients; Greece (search for similar items in EconPapers)
JEL-codes: H21 H25 H26 (search for similar items in EconPapers)
Date: 2017
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DOI: 10.1016/j.econlet.2017.05.009

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