Redistributing Income through VAT

This article analyzes from a theoretical point of view the incidence of the value added tax on the current expenditure and income of the households when applying reduced rates and exceptions from this tax for some prevalent goods from the consumption of households with small income. The replacement...

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Bibliographic Details
Published in"Ovidius" University Annals. Economic Sciences Series (Online) Vol. XVIII; no. 2; pp. 588 - 592
Main Authors Cuceu Ionuţ-Constantin, Văidean Viorela-Ligia
Format Journal Article
LanguageEnglish
Published Ovidius University Press 01.01.2018
Subjects
expenditure
income
regressive
tax
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Summary:This article analyzes from a theoretical point of view the incidence of the value added tax on the current expenditure and income of the households when applying reduced rates and exceptions from this tax for some prevalent goods from the consumption of households with small income. The replacement of the standard VAT rate with reduced rates and exemptions for such goods reduces the regressive character of this tax related to the current income (and increases the progressivity degree of the tax in relation to the current expenditures of households), when the size and the structure of consumption remains unchanged.
ISSN:2393-3127
2393-3127