Details

Autor(en) / Beteiligte

• Boadway, Robin
• Sato, Motohiro

Titel

Optimal Tax Design and Enforcement with an Informal Sector

Ist Teil von

• American economic journal. Economic policy, 2009-02, Vol.1 (1), p.1-27

Ort / Verlag

American Economic Association

Erscheinungsjahr

2009

Quelle

PAIS Index

Beschreibungen/Notizen

• An optimal commodity tax approach is taken to compare trade taxes and VATs when some commodities are produced informally. Trade taxes apply to all imports and exports, including intermediate goods, while the VAT applies only to sales by the formal sector and imports. The VAT achieves production efficiency within the formal sector, but, unlike trade taxes, cannot indirectly tax profits. Making the size of the informal sector endogenous in each regime is potentially decisive. The ability of the government to change the size of the informal sector through costly enforcement may also tip the balance in favor of the VAT.