Abstract
A value-added tax (VAT) is a tax on the value created in goods or services during production, distribution, and sales. VATs are generally constructed as consumption taxes. In principle, a consumption VAT is neutral in its treatment of savings and consumption. In practice, VATs are often designed with exemptions and zero-ratings that generate consumption distortions. An important issue for VATs is their implementation in a federal system. A number of modifications of the basic VAT structure have been proposed to strike a balance between the efficiency of a common rate across political units and the desire for country-specific VAT rates.
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Metcalf, G.E. (2018). Value-Added Tax. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95189-5_1853
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DOI: https://doi.org/10.1057/978-1-349-95189-5_1853
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Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-1-349-95188-8
Online ISBN: 978-1-349-95189-5
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