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VAT Rates and their Impact on Business and Tax Revenue

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  • Petr Mach

Abstract

Tax rates have impact on business activity and on the volume of the tax revenue. This relation is generally known as the Laffer curve.In this article data on VAT rates and revenues in the Czech Republic between 2006—2015 are used to estimate the Laffer curve and to find the revenue maximising tax rates.It is shown that the standard rate of VAT in the Czech Republic is behind the revenue maximising rate and that decreasing the rate would help the taxpayer as well as the state budget.

Suggested Citation

  • Petr Mach, 2018. "VAT Rates and their Impact on Business and Tax Revenue," European Research Studies Journal, European Research Studies Journal, vol. 0(1), pages 144-152.
    • Handle: RePEc:ers:journl:v:xx:y:2017:i:3b:p:144-152
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    File URL: https://www.ersj.eu/dmdocuments/2018_XXI_1_13.pdf
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    1. Ramona Rupeika-Apoga & Irina Solovjova, 2017. "Access to Finance for Latvian SMEs," European Research Studies Journal, European Research Studies Journal, vol. 0(3A), pages 57-68.
    2. Pociovalisteanu Diana-Mihaela & Thalassinos Eleftherios, 2009. "The Structural Funds and the Economic and Social Cohesion Process," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 1, pages 313-330, May.
    3. Eleftherios I. Thalassinos & Erginbay Ugurlu & Yusuf Muratoglu, 2015. "Comparison of Forecasting Volatility in the Czech Republic Stock Market," Applied Economics and Finance, Redfame publishing, vol. 2(1), pages 11-18, February.
    4. Diana-Mihaela Pociovalisteanu & Emilian M. Dobrescu, 2009. "The Role of Structural Funds in Economic and Social Cohesion Process," European Research Studies Journal, European Research Studies Journal, vol. 0(2), pages 27-36.
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    Cited by:

    1. SMEDOIU-POPOVICIU Alexandra & HOROBET Alexandra-Lavinia & BELASCU Lucian, 2023. "Is There An Optimal Value Added Tax Rate?," Revista Economica, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 75(1), pages 80-90, April.
    2. Renyan Mu & Nigatu Mengesha Fentaw & Lu Zhang, 2022. "The Impacts of Value-Added Tax Audit on Tax Revenue Performance: The Mediating Role of Electronics Tax System, Evidence from the Amhara Region, Ethiopia," Sustainability, MDPI, vol. 14(10), pages 1-22, May.

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    More about this item

    Keywords

    Tax; Tax Revenue; Value Added Tax; Laffer Curve. JEL Code: H2; H21; H26.;
    All these keywords.

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation

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