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Equity and effciency costs of raising tax revenue in Colombia

Thomas Rutherford (), Miles K. Light () and Felipe Barrera-Osorio ()

Informes de Investigación from Fedesarrollo

Abstract: This paper examines the Colombian tax system as it is represented in the 1997 social accounts. We implement an economic model based on these data and evaluate the welfare e®ects of raising additional government revenue. The paper considers the marginal and inframarginal cost of raising revenue hrough various tax instruments, including captial taxes, excise taxes, mport tari®s, and value-added taxes. We conclude that value-added taxes nd select excise taxes are the most e±cient revenue source in both the hort- and long-run. Our analysis addresses both e±ciency and equity onsiderations in the design of tax policy. Independent of the need for dditional revenue, we find that social welfare could be improved through the adoption of more uniform tari® and value-added taxes, but some reforms of this type may be regressive.

Keywords: Impuestos; Modelos de Equilibrio General Aplicado (search for similar items in EconPapers)
JEL-codes: D58 H22 (search for similar items in EconPapers)
Pages: 58
Date: 2003-10-31
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Handle: RePEc:col:000124:002583