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The Performance of VAT in DGD-partner countries

Author

Listed:
  • Mattéo Godin

    (CRED, University of Namur)

  • Romain Houssa

    (CRED, University of Namur)

  • Kelbesa Megersa

    (CRED, University of Namur)

Abstract

This study presents a case study on the value added-tax (VAT) with the objective to design appropriate policies aiming to improve domestic-resource mobilization in developing countries. Data from 18 DGD-partner countries (past and present) over the 1990-2012 period show that, although the performance of VAT has inproved in recent years, many of these countries can close their resource gap by implementing reforms that improve the efficiency of their VAT system. We present an in-depth analysis on Bolivia to illustrate how such reforms could be designed. Bolivia is also an interesting case since the country was one of the first developing countries to adopt VAT in a context characterized by socio-economic and political challenges. We argue that the credibility of the Bolivian government as well as the institutional design of its tax system were very important for the success of their tax reforms. Moreover, we show that the improvement of both the policy and compliance gaps have contributed to the reduction of Bolivia’s VAT gap in recent years, but improvements in compliance gap are the main deriver.

Suggested Citation

  • Mattéo Godin & Romain Houssa & Kelbesa Megersa, 2017. "The Performance of VAT in DGD-partner countries," BeFinD Working Papers 0116, University of Namur, Department of Economics.
    • Handle: RePEc:nam:befdwp:0116
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    References listed on IDEAS

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    Cited by:

    1. Romain Houssa & Kelbesa Megersa & Roukiatou Nikiema, 2017. "The sources of VAT gaps in WAEMU: case studies on Benin and Burkina Faso," BeFinD Working Papers 0122, University of Namur, Department of Economics.
    2. Romain Houssa & Kelbesa Megersa, 2020. "Capacity Support for Domestic Revenue Mobilization - The case of Belgian development cooperation and partner countries," BeFinD Working Papers 0131, University of Namur, Department of Economics.

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    More about this item

    Keywords

    Value Added Tax; Tax gaps; Tax Efficiency; Tax Compliance; Tax Law; Bolivia;
    All these keywords.

    JEL classification:

    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean
    • N16 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Latin America; Caribbean
    • N26 - Economic History - - Financial Markets and Institutions - - - Latin America; Caribbean
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • K34 - Law and Economics - - Other Substantive Areas of Law - - - Tax Law

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