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On the Poverty and Equity Implications of a Rise in the Value Added Tax

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  • Nisreen Salti
  • Jad Chaaban

Abstract

This paper examines the impact of a rise in the Value Added Tax (VAT) on poverty and inequality in Lebanon. The paper develops an empirical model based on consumer demand theory and uses only household survey data on expenditures and spatial price indexes. The simulation results, using own and cross price demand elasticities estimated with an Almost Ideal Demand System, show that the proposed VAT rate increases will have a non-negligible impact on poverty and inequality in Lebanon, despite current VAT exemptions.

Suggested Citation

  • Nisreen Salti & Jad Chaaban, 2010. "On the Poverty and Equity Implications of a Rise in the Value Added Tax," Middle East Development Journal, Taylor & Francis Journals, vol. 2(1), pages 121-138, January.
    • Handle: RePEc:taf:rmdjxx:v:2:y:2010:i:1:p:121-138
    DOI: 10.1142/S1793812010000174
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    Citations

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    Cited by:

    1. Makdissi Paul & Seif Edine Mohamad, 2020. "Is the Elimination of Food Subsidies the Right Policy to Address Lebanon’s Public Finance Crisis?," Review of Middle East Economics and Finance, De Gruyter, vol. 16(2), pages 1-17, August.
    2. Yaru, Mohammed Aminu & Adisa-Ohiaka, Ubaydah, 2022. "Indirect Taxation and Poverty in Sub-Saharan Africa: An Empirical Evidence from Panel Data Analysis," African Journal of Economic Review, African Journal of Economic Review, vol. 10(5), December.
    3. Molnár, György & Cseres-Gergely, Zsombor & Szabó, Tibor, 2016. "Pénzt vagy életet?. Empirikus eredmények néhány gazdaságpolitikai beavatkozás heterogén jóléti hatásairól [For money or for life?. Empirical findings on the heterogenous welfare effects of some eco," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(9), pages 901-943.
    4. Javier García-Enríquez & Cruz A. Echevarría, 2016. "Consistent Estimation of a Censored Demand System and Welfare Analysis: The 2012 VAT Reform in Spain," Journal of Agricultural Economics, Wiley Blackwell, vol. 67(2), pages 324-347, June.
    5. Zsombor Cseres-Gergely & Gyorgy Molnar & Tibor Szabo, 2017. "Expenditure responses, policy interventions and heterogeneous welfare effects in Hungary during the 2000s," CERS-IE WORKING PAPERS 1704, Institute of Economics, Centre for Economic and Regional Studies.
    6. Warwick, Ross & Harris, Tom & Phillips, David & Goldman, Maya & Jellema, Jon & Inchauste, Gabriela & Goraus-Tańska, Karolina, 2022. "The redistributive power of cash transfers vs VAT exemptions: A multi-country study," World Development, Elsevier, vol. 151(C).
    7. Adham Sayed, 2020. "Income Inequality and Public Debt: What Can Be Learned from the Lebanese Indebtedness?," Business and Economic Research, Macrothink Institute, vol. 10(4), pages 83-106, December.

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