A Hybrid Consumption-Based Direct Tax Proposed for Bolivia

Charles E. McLure and George Zodrow ()

Chapter 6 in Taxation in Theory and Practice:Selected Essays of George R Zodrow, 2019, pp 169-193 from World Scientific Publishing Co. Pte. Ltd.

Abstract: In 1994 the authors designed a consumption-based direct tax for the government of Bolivia. The proposal combined yield exemption treatment (exemption of interest income and no deduction for interest expense) of individuals with consumed income tax treatment (taxation or deduction of the net proceeds of borrowing and lending, as well as interest income and expense) of business. This article explains why taxation based on cash flow has administrative and economic advantages over a conventional income tax and why the hybrid system proposed is preferable to either pure form of consumption-based tax.

Keywords: Taxes; Taxation; Tax Reform; Consumption Taxation; State and Local Finance; Tax Competition (search for similar items in EconPapers)
Date: 2019
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Journal Article: A hybrid consumption-based direct tax proposed for Bolivia (1996)
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