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Progressivity and decomposition of VAT in the Mexican border, 2014

Luis Huesca (), Arturo Robles () and Abdelkrim Araar ()

No 25, Estudios Regionales en Economía, Población y Desarrollo. Cuadernos de Trabajo de la Universidad Autónoma de Ciudad Juárez. from Cuerpo Académico 41 de la Universidad Autónoma de Ciudad Juárez

Abstract: We measure the general redistributive effect in the Mexican fiscal system and its northern border with two decomposition approaches. The novelty of this application lies in the use of non-parametric techniques and the fact that we did not assume any functional relationship among the variables in analysis. Our paper contributes with an assessment of the new 2014 fiscal reform according to the Value Added Tax (VAT) and its effects on the households. A tax-benefit system with relative progressivity but high HI effect is found as well as an increase on tax revenues up to 4 percent of GDP from VAT in the border as well. Our analytical method to decompose the total progressivity measured by the contributions of different tax sources from VAT, allow us to conclude which sort of products should or should not be taxed with the general rate.

Keywords: Value added tax; redistribution; vertical equity; horizontal inequity; non-parametric analysis (search for similar items in EconPapers)
JEL-codes: D63 H22 H23 I32 C14 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-acc, nep-pbe and nep-pub
Date: 2015-01-01, Revised 2015-01-01
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