A new approach to financial VAT

Julio López-Laborda and Guillermo Peña

International Center for Public Policy Working Paper Series, at AYSPS, GSU from International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University

Abstract: Many methods of taxing financial services have been developed in recent decades, but so far, none of them is definitive. The cash-flow method, considered one of the most theoretically accurate approaches, has turned out not to be viable. The purpose of this article is to propose a new approach to taxing financial services that would be theoretically accurate and could be applied practically across countries. We develop an approach called the “mobile-ratio” method that taxes financial transactions using a rate that obtains, roughly, full taxation of the value added by financial services. The simple, neutral method generated can easily be administered by entities. This paper will be useful for public economists and policy-makers in order to raise tax revenue and improve economic efficiency and neutrality.

Keywords: Financial VAT exemption; mobile-ratio method (search for similar items in EconPapers)
Pages: 21 Pages
Date: 2016-04-19
New Economics Papers: this item is included in nep-acc and nep-pub
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ays:ispwps:paper1606

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