The VAT in Developing and Transitional Countries

Value-added tax (VAT) dominates tax systems around the world. But should every country have a VAT? Is VAT always as good as it could be in economic, equity and administrative terms? In developing and transitional countries the answers to such questions are critical to stability, growth and development. VAT is a critical fiscal tool in most countries. But VAT can sometimes be better designed and almost always better administered. The key questions that must be answered in designing and implementing VAT are essentially the same in all countries. But different tax designs may best suit different countries facing different circumstances. This book reviews experiences with VATs around the world and assesses how the choice of particular design features may affect outcomes in particular contexts.

Table of Contents:
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?

About the Author :
Richard M. Bird is Professor Emeritus, Department of Economics and Adjunct Professor and Co-Director of the International Tax Program at the Joseph L. Rotman School of Management, University of Toronto. He is a Fellow of the Royal Society of Canada and currently holds appointments as a Fellow at the C. D. Howe Institute and Distinguished Visiting Professor at the Andrew Young School of Public Policy, Georgia State University. He has served in the Fiscal Affairs Department of the International Monetary Fund; been a visiting professor in the United States, the Netherlands, Australia and elsewhere; and been a frequent consultant to the World Bank and other national and international organizations, working in more than 50 countries around the world. He has written and edited dozens of books and hundreds of articles, especially on public finance in developing countries. He was awarded the Daniel M. Holland Medal of the National Tax Association in 2006 for outstanding contributions to the study and practice of public finance. Pierre-Pascal Gendron is Professor of Economics, The Business School, Humber Institute of Technology and Advanced Learning, Toronto, Canada. He has served in the federal government of Canada; been a consultant in progressive positions with tax practices of professional services firms in Canada and the Netherlands; and served as consultant on fiscal matters for the International Monetary Fund, the World Bank, the US Agency for International Development and the Forum of Federations. As a member of the Expert Roster of the Fiscal Affairs Department of the IMF, he has participated in a number of technical assistance missions on tax policy in Africa and the Middle East since 2007. He has also taught a VAT course at the African Tax Institute, University of Pretoria, South Africa. He has written extensively on public economics, especially in the area of taxation. He regularly speaks on the subject of VAT at conferences and seminars in the Americas, Europe and Africa.

Review :
'This is a much needed book that reviews and evaluates the world's collective wisdom and experience on the design and, no less important, the operation of the VAT – the most important fiscal innovation of the last half-century. It provides a 'state of the art' survey and commentary on the extensive writings, both published and unpublished – hundreds of articles, books and papers are cited – that have appeared over the span of the last 40 years. In addition, the book incorporates a wealth of hands-on experience by the authors in countries as diverse as Egypt, Colombia, Ukraine, Jamaica, Mexico, Argentina and many others.' Sijbren Cnossen, University of Maastricht 'This is a rich and elegant book on a rich and (if we are to understand it properly) inelegant topic. It sets out some key issues and challenges in what remains a largely untrodden area. Perhaps the VAT is finally starting to get the attention it deserves.' Michael Keen, Journal of Economic Literature 'Richard M. Bird and Pierre-Pascal Gendron are leading VAT scholars and this book is a great addition to the VAT literature. It is well researched and elegantly written, and certainly deserves a prominent place on the bookshelves of students, scholars, and policy makers.' Jinyan Li, Canadian Tax Journal 'The VAT in Developing and Transitional Countries … provides a readable, comprehensive, and thoughtful summary of the critical issues related to adopting and operating the value added tax (VAT) in developing and transitional economies. … [It] is a valuable addition to the library of anyone interested in tax design, public administration, or development in general.' Victoria Perry, Finance and Development 'In this book the authors combine a wealth of experience with actual VATs with crystal-clear analytical reasoning to address the main problems in VAT implementation and, without any shyness, suggest sensible solutions that depend on the environment. This impressive work should be on the bookshelf of any policymaker who must deal with the real world of tax policy, and of any scholar or student who wishes to learn about that world. It is destined to be the standard reference on VAT for years to come.' Joel Slemrod, University of Michigan 'This book provides a wealth of information on the tax that is the world's most widely used consumption-based revenue instrument. It carefully analyzes in one clearly and concisely written volume the latest advances in the theoretical, empirical and administrative literatures on the VAT. Who knows, it might even help prod US policymakers into giving the VAT the serious consideration it deserves.' George Zodrow, Rice University