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A Multi-Sectoral Model for Estimating VAT Revenues in Hungary

  • Jean Tesche

Abstract

Most Central and Eastern European countries have recently replaced the traditional turnover tax system, with its multiplicity of rates, with a value added tax (VAT). Since the VAT is a major source of tax revenue, it is important to have a reasonably accurate means of estimating the base and potential revenue. When exports are exempted and a credit for capital investment is allowed, the VAT is essentially a retail sales tax and can be estimated from sales. However, once a number of exemptions is added, estimation becomes more complex. Taxes are not paid on exempt goods, but neither is a credit received for purchases of exempt goods. Exempt goods must be taken out of the taxable base, but when an exempt good is purchased to produce a taxable good, it must be added back in.

Keywords

Total Supply Base Revenue Taxable Supply Multisectoral Model Trade Trade 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Copyright information

© Macmillan Press Ltd 1998

Authors and Affiliations

  • Jean Tesche

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