Book contents
- Frontmatter
- Contents
- List of Tables
- Preface
- 1 Why This Book?
- 2 The Rise of VAT
- 3 Is VAT Always the Answer?
- 4 Trade and Revenue
- 5 Equity and the Informal Sector
- 6 What Should Be Taxed?
- 7 Key Issues in VAT Design
- 8 New Issues in VAT Design
- 9 Administering VAT
- 10 Dealing with Difficulties
- 11 The Political Economy of VAT
- 12 Where Do We Go from Here?
- Annex
- References
- Index
6 - What Should Be Taxed?
Published online by Cambridge University Press: 16 November 2009
- Frontmatter
- Contents
- List of Tables
- Preface
- 1 Why This Book?
- 2 The Rise of VAT
- 3 Is VAT Always the Answer?
- 4 Trade and Revenue
- 5 Equity and the Informal Sector
- 6 What Should Be Taxed?
- 7 Key Issues in VAT Design
- 8 New Issues in VAT Design
- 9 Administering VAT
- 10 Dealing with Difficulties
- 11 The Political Economy of VAT
- 12 Where Do We Go from Here?
- Annex
- References
- Index
Summary
VAT is often thought of as a relatively simple tax. Admittedly, a VAT is, by definition, simpler than an income tax for reasons of both definition (it is less ‘net’ so its base is easy to determine) and timing (there are almost no intertemporal issues in applying VAT). Nonetheless, designing and implementing a VAT are far from simple tasks. In this and the next two chapters we consider a number of design issues, leaving some important administrative questions for Chapter 9 and 10. In the present chapter, we discuss several issues in defining the base of a VAT – the treatment of real property and land, the treatment of public sector and nonprofit activities, and the treatment of financial services. These three issues have proved troublesome in practice and not easy to resolve in theory.
Of course, many other design issues are also often troublesome in developing and transitional countries – for example, the treatment of agriculture and the treatment of tourism – but are not discussed in this book. Other interesting and sometimes important issues we do not discuss include the treatment of gambling, a number of issues related to VAT and services (especially cross-border services), and many aspects of VAT administration (including penalties, issues related to imports [uplifts, post-import control, etc.], and tax ‘offsets’). It would take a much longer book than this to do justice to all aspects of VAT.
- Type
- Chapter
- Information
- The VAT in Developing and Transitional Countries , pp. 81 - 107Publisher: Cambridge University PressPrint publication year: 2007