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The effect of card payments on vat revenue in Greece

George Hondroyiannis () and Dimitrios Papaoikonomou ()

No 225, Working Papers from Bank of Greece

Abstract: 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)
Pages: 23
Date: 2017-05
New Economics Papers: this item is included in nep-acc, nep-iue, nep-mac, nep-pay and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
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Persistent link: https://EconPapers.repec.org/RePEc:bog:wpaper:225

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