Incidence and Distributional Effects of Value Added Taxes

  title={Incidence and Distributional Effects of Value Added Taxes},
  author={Ingvil Gaarder},
  journal={The Economic Journal},
Much of the controversy surrounding recent policy proposals to broaden the base for value added taxes (VAT) revolves around who ultimately bears the burden of these taxes. The typical assumption is that consumer prices fully reflect taxes, so that the main empirical question is how the tax induced price changes affect members of different income groups. However, the evidence base is scarce and market imperfections could generate both over and under-shifting of VAT to consumer prices. In this… Expand
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