The Impact of Value Added Tax on Household Expenditure in Colombia

Christian Jaramillo H. () and Jorge Tovar

Lecturas de Economía, 2008, issue 68, 67-93

Abstract: this paper quantifies the impact of VAT on household expenditures by taking advantage of the relative variation of VAT in Colombia; this variation is usually used as identification strategy. To this end, we use data drawn from the Encuesta Continua de Hogares (Continuous Household Survey) and we correlate the VAT and household expenditures. In doing so, we estimate the impact of VAT on food, entertainment and telecommunication (cellular phone) expenditures. Our results suggest that an increment of VAT has positive effects on food and telecommunication expenditures and negative effects on entertainment and cultural goods. Additionally, our estimations show that an increasing VAT has differentiated effects depending on household demographic characteristics.

Keywords: Value Added Tax; fiscal incidence; household expenditure; household surveys (search for similar items in EconPapers)
JEL-codes: H22 H31 (search for similar items in EconPapers)
Date: 2008
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Persistent link: https://EconPapers.repec.org/RePEc:lde:journl:y:2008:i:68:p:67-93

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