The effect of card payments on vat revenue in Greece
George Hondroyiannis and
Dimitrios Papaoikonomou ()
No 225, Working Papers from Bank of Greece
The effect of card payments on VAT revenue performance in Greece is investigated using quarterly observations on card transactions during 2002q1-2016q2. Time-varying-coefficient methods are employed, in order to study the role of increasing card payments after the imposition of cash restrictions in July 2015. 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. It is argued that stronger incentives for using card payments in tax evading industries can help lock-in the recent strong revenue performance when cash restrictions are lifted.
Keywords: VAT; card payments; time-varying-coefficients; Greece (search for similar items in EconPapers)
JEL-codes: E62 H21 H25 H26 K34 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-acc, nep-iue, nep-mac, nep-pay and nep-pbe
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