Back Matter

Back Matter

Author(s):
Alan Tait
Published Date:
June 1988
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    appendix I An Example of a Value-Added Tax Return Form
    appendix II Chronological Schedule of Work to Be Done to Introduce a VAT in About Eighteen Months

    The following timetable sets out broad guidelines for the work that needs to be done month by month starting July 1988 to introduce a vat by, say, January 1, 1990, and enforce it effectively thereafter. It might be intended as an aide-mémoire for the head of the vat committee and for the heads of the various subcommittees preparing the vat. Progress should be monitored regularly to identify any failure that could jeopardize the planning or the proper implementation of the vat on the target date. It has to be pointed out that while the list may appear reasonably comprehensive, there will inevitably still be many unrecorded auxiliary activities to which attention has to be given if the vat is to be implemented successfully and on time.

    MonthTasks
    By end-19881.Settle policy proposals on the scope and the structure of the vat, including a cost-benefit analysis, and on transitional measures, and obtain the relevant ministerial approval with regard to policy, the funding plan, and so on.
    2.Training subcommittee prepares training plan, identifies training courses and orientation seminars for executives and managers, selects training staff, and identifies the need for other training resources, such as office space, photocopiers, and secretarial support.
    3.Design and present an orientation seminar on the basic principles of vat for executives and managers at the revenue, customs, and excise departments.
    4.Prepare a course for training all supervisors and operating personnel concerned with the vat in the revenue and customs departments on the basic principles of vat operation.
    5.Design vat return form, vat payment form, and application form for vat registration.
    6.Within the revenue department, determine the administrative framework of the vat, such as detailed procedures for the registration of taxpayers, processing of vat returns, audit for vat, and collection procedures.
    7.Start discussion on the extent of computer support in vat administration and the system’s design.
    8.Identify the resource needs for implementation of the vat, with particular attention to funding and the filling of outstanding vacancies.
    9.Legal subcommittee starts discussion on vat and drafts laws and basic regulations.
    10.Make final decisions, both within the revenue department and with the customs department, on registration procedures and the incorporation of vat registration information in the tax master file.
    11.Discuss with the customs department the role of customs in the enforcement of the vat.
    12.Decide on computer involvement and consequently determine the needs for changes in existing programs and/or the development of new programs.
    13.Determine the broad setup of the administrative system for vat and examine possible consequences for the organization of the revenue department.
    14.Draft a simple vat information booklet for press and public use, for distribution in February 1989.
    15.Produce a trial list of potential vat taxpayers based on the information available in:
    • The revenue department’s computer system (data on business tax and income tax).

    • The customs department (exporters and importers).

    • Local manual listings, knowledge and surveys, including press advertisements and telephone directories.

    16.Make a preliminary estimate of staff required in each office to administer the vat at the beginning of each month as registration, educational visits, collection, enforcement, and verification progress. The estimate should be based on the numbers of likely taxpayers on the list at 15 above.
    17.Begin preparation of a staff manual on the vat legislation and procedures.
    18.Draft staff manual on vat registration procedures.
    19.Start preparations for extensive publicity campaign to be held from May 1989, including the production of publicity literature.
    January 19891.Review all actions to date and monitor progress to identify delays.
    2.Complete preliminary draft of the vat law for full committee review.
    3.Give course on vat principles to relevant supervisors and operating personnel.
    4.Design forms for vat administration.
    5.Design general audit policy for vat.
    6.Work out curriculum for vat auditors’ training, determine content of manuals for that training, and select instructors.
    7.Establish vat units in each regional, provincial, district, and area offices.
    February 19891.Complete drafting of vat law and submit draft for government approval.
    2.Conduct first media campaign to inform the public about the main features of the vat (including distribution of booklet prepared in 1987).
    3.Assess requirements for informational material, printing forms, etc., for public and official use.
    4.Draft basic regulations.
    5.Hold talks with banks (if included in collection design) regarding collection procedures.
    6.Draft manuals for vat auditors’ training.
    March 19891.Submit final law and proposed regulations to parliament.
    2.Assess needs for and order office supplies and equipment (for a simple example, rubber stamps).
    3.Design and print forms for staff use on educational and verification visits and for interoffice use.
    4.Continue drafting manuals for vat auditors’ training.
    April 19891.Select participants for vat auditors’ training and complete preparation of the actual organization of the training.
    2.Design curriculum and manuals for the training of officials who will be receiving and processing vat returns and payments.
    3.Set up telephone information service, where the public and traders can get information about any issues related to vat.
    4.Design and draft a staff manual on educational visits.
    5.Draft a vat guide for businesses for issue with registration certificates.
    6.Monitor progress, in the revenue department, in collection offices, and in the customs and excise departments, to identify bottlenecks.
    May 19891.Hold discussions with trade and professional organizations about various issues regarding vat administration.
    2.Complete drafting basic regulations and submit for government/ministerial approval.
    3.Start discussions on and drafting of more detailed regulations for implementation of basic regulations.
    June 19891.Publish the vat law and the basic regulations.
    2.Start large-scale publicity campaign for the vat, emphasizing the registration requirements and procedures.
    3.Commence lectures and seminars with trade and professional organizations to present details of the intended vat procedures.
    4.Distribute to the local offices blank application forms for registration, for issue on request.
    5.Start vat auditors’ training.
    July 19891.Send out vat registration forms with letters (and attached information booklet) to those identified in November 1987 as likely tax-payers for vat, telling them that they will be considered full vat taxpayers unless they provide evidence to the contrary within, say, three weeks.
    2.Visit interested persons who have requested such a visit to resolve particular vat problems.
    3.Review progress in preparation of computer programming.
    4.Agree with banks on procedures for receiving returns and vat payments and for communications with the revenue department offices.
    5.Design claim forms for stock relief.
    6.Prepare organization of educational visits.
    August 19891.Assign vat prefix to tins of taxpayers who returned their registration forms and to other taxpayers based on customs and excise information and available data on taxpayers who failed to return their registration forms.
    2.Send registration certificates to taxpayers defined in (1), accompanied by a batch of payment vouchers and related instructions on monthly payments.
    3.Start educational visits to the premises of already registered taxpayers.
    4.Commence a publicity campaign designed to get those not yet registered to do so between September 1 and October 31.
    5.Monitor progress in all fields and advise the Minister if delays would be thought to be crucial with regard to the introduction date of January 1, 1989.
    September 19891.Enter data from application forms of voluntary registrants.
    2.Print certificates of registration and mail to voluntary registrants, with payment vouchers and instructions.
    3.Complete and publish more detailed vat regulations.
    4.Design procedures for processing claims for stock relief.
    October 19891.Continue registration procedures from September.
    2.Continue training staff.
    3.Test adapted and newly designed computer programs for processing payment forms and incoming returns; test on-line retrieval of vat taxpayer master file data.
    4.Design criteria for vat audit selection.
    5.Conduct publicity campaign about the effect of vat on prices, asking the public’s collaboration to help contain that effect.
    6.Distribute claim forms for stock relief to the relevant offices and give them instructions about the reception and processing of stock relief claims.
    November 19891.Continue registration procedures from September and October.
    2.Line-up computerized vat on-line retrieval system and print alphabetical and numeric lists of registered taxpayers for distribution to the relevant regional, provincial, and area offices for backup purposes.
    3.Monitor progress of educational visits and consider action to deal with any problems.
    4.Continue educational/canvass visits.
    5.Check that revised customs entry forms that accommodate the tin prefix are available for use from January 1, 1990.
    December 19891.Evaluate progress of registration and consider emergency publicity campaign to increase voluntary compliance by those liable.
    2.Train office staff to deal specifically with questions on vat returns, on validation of manually entered names and addresses on forms, and on stock relief regulations.
    3.Continue educational/canvass visits.
    4.Publicize stock relief facility and final date for claims.
    5.Issue forms for stock relief on request.
    6.Publicize the changes in customs entry forms effective from January 1, 1990.
    January 1990(vat starts)1.Conduct publicity campaign to emphasize need for invoicing and bookkeeping to enable returns to be completed properly.
    2.Revive publicity campaign about the effect of the vat on prices (see October 1989).
    3.Continue educational visits to newly registered taxpayers and the registration drive.
    4.Receive and process stock relief claims and issue credit vouchers.
    5.Distribute blank computer-printed payment forms and address labels for payment in February (if there is a monthly payment requirement).
    February 19901.Continue educational visits and the registration drive.
    2.Initiate publicity to encourage timely filing of returns.
    3.Complete the data-entry of incoming vat returns.
    4.Reconcile receipts from banks and other collection points with batches of returns received and resolve any differences.
    March 19901.Send reminder letters to those registered who failed to file their first return or make their first payment by February 28.
    2.Issue (via computer) fines for late filing or payment to those who do not react to the reminders.
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      Herschel, Federico J.,“Tax Evasion and Its Measurement in Developing Countries,”Public Finance (The Hague), Vol. 33, No. 3 (1978), pp. 23268.

      Hicks, Alistair,“VAT and the Arts,”The Spectator (London), January10, 1987, p. 29.

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      Hufbauer, Gary,“The Consumption Tax and International Competitive ness,”in The Consumption Tax: A Better Alternative?ed. by CharlsE. Walker and MarkA. Bloomfield (ed) (Cambridge, Massachusetts: Ballinger Publishing Company, 1987).

      Ireland, Budget, 1985, Financial Statement of the Minister of Finance, January30, 1985 (Dublin: Stationery Office, 1985).

      Ireland, Central Bank, Quarterly Bulletin, “Submission to Commission on Taxation” (Dublin), Winter1980, pp. 4372.

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      Ireland, Commission on Taxation, Fifth Report of the Commission on Taxation: Tax Administration (Dublin: Stationery Office, October1985).

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      Jenkins, Glenn,“The Evolution of Sales Tax Reform in Canada,” in Policy Forum on the Business Transfer Tax, ed. by RobinW. Boadway and Jack M.Mintz (ed) (Kingston, Ontario: John Deutsch Institute for the Study of Economic Policy, Queens University, 1986).

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      New Zealand, GST Coordinating Office, Bloodstock and Racing Industry & GST (Wellington).

      New Zealand, GST Coordinating Office, Clubs, Charities and Associations & GST (Wellington: Government Printer, 1986).

      New Zealand, GST Coordinating Office, The Fire and General Insurance Industry & GST (Wellington: Government Printer, April1986).

      New Zealand, GST Coordinating Office, Pricing & GST (Wellington).

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      New Zealand, GST Coordinating Office, Working with GST (Wellington: Government Printer, 1985).

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      Parkinson, Dennis A.,Value Added Tax in the EEC (London: Graham & Trotman, 1981).

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      Pohmer, Dieter,“Germany,” in The Value-Added Tax: Lessons from Europe, ed. by Henry J.Aaron (ed) (Washington: Brookings Institution, 1981).

      Porras, Fernando A.,“Value Added Sales Tax (ITBM) in Panama,” technical paper presented at XIII CIAT General Assembly (Quito, Ecuador: Centro Interamericano de Administradores Tributarios, 1979).

      Portugal, Comissão do IVA,O Impacto do IVA na Economia Portuguesa (Lisbon: Imprensa Nacional, 1984).

      “Portugal: Effects of VAT,”World Tax Report (London), February1986, p. 9.

      “Portugal: Taxation 1987,”in European Taxation, International Bureau of Fiscal Documentation (Amsterdam), Vol. 27, No. 8 (August1987), pp. 26470.

      Prebble, John,“Tax Reform in New Zealand,”Asian-Pacific Tax and Investment Bulletin (Singapore), Vol. 5, No. 1 (January1987), pp. 121.

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      Price Waterhouse, “New Zealand: The Introduction of Goods and Services Tax,”Asian-Pacific Tax and Investment Bulletin (Singapore), Vol. 4 (August1986), pp. 299311.

      Rayney, Peter,“VAT and the Property Developer,”Accountancy (London), Vol. 98 (October1987), pp. 8082.

      Robinson, Bill,ed., Options for 1988: The Green Budget (London: Institute for Fiscal Studies, 1988).

      Roth, William V., Jr.,The Business Transfer Tax Act of 1985 (S.1102, 99th Congress, 1st Session, Washington, May8, 1985).

      Roth, William V., Jr.,“The Roth Reforms,” speech to the National Press Club, Washington, February20, 1986.

      Sampson, Anthony A.,“The Shift to Indirect Taxation in a Unionized Econ omy,”Bulletin of Economic Research (Leeds), Vol. 38 (January1986), pp. 8791.

      Sandford, Cedric,Value-Added Tax—U.K. Experience: Lessons for Australia, Occasional Paper No. 22 (Canberra: Centre for Research on Federal Financial Relations, Australian National University, 1981).

      Sandford, Cedric, “The Costs of Paying Tax,”Accountancy (London), Vol. 97 (June1986), pp. 10811.

      Sandford, Cedric,Michael R.Godwin, Peter J.W.Hardwick, and M.I.Butterworth,Costs and Benefits of VAT (London: Heinemann Educational Books, 1981).

      Schenone, Osvaldo,“Notas sobre la Aplicación del Impuesto al Valor Agregado en la Argentina,”Desarrollo Económico (Buenos Aires), Vol. 21, No. 81 (April-June1981), pp. 97108.

      Shoup, Carl S.,“Taxation in France,”National Tax Journal (Columbus, Ohio), Vol. 8 (December1955), pp. 32544.

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      Smith, Stephen,“Tax Enforcement and the Black Economy: Cost-Effectiveness and Compliance,”Public Money (London), Vol. 6 (December1986), pp. 2528.

      Software Digest Ratings Newsletter (Philadelphia, Pennsylvania), Vol. 3 (July1986).

      Somerville, Ian, and JohnArnold,VAT Survival: Penalty … or Peace of Mind (London: Deloitte, Haskins, & Sells, 1985).

      South Africa, Report of the Commission of Inquiry into the Tax Structure of the Republic of South Africa (Margo Commission) (Pretoria: Government Printer, 1987).

      Stephens, Robert J.,“Tax Reform in New Zealand,”Australian Tax Forum (Clayton, Victoria), Vol. 4, No. 3 (1987), pp. 32746.

      Stockfisch, J.A.,“Value-Added Taxes and the Size of Government: Some Evidence,”National Tax Journal (Columbus, Ohio), Vol. 38 (December1985), pp. 54752.

      Strachan, Valerie,“VAT in the U.K.: The Tax Collector’s View,” in The Political Economy of Taxation, ed. by AlanPeacock and FrancescoForte (ed) (Oxford: Basil Blackwell, 1981).

      Tait, Alan A.,Value Added Tax (London: McGraw-Hill, 1972).

      Tait, Alan A.,“Is the Introduction of a Value-Added Tax Inflationary?”Finance & Development (Washington), Vol. 18 (June1981), pp. 3842.

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      Tanzi, Vito,“Taxation and Price Stabilization,” in Comparative Tax Studies: Essays in Honor of Richard Goode, ed. by SijbrenCnossen (ed) (Amsterdam: North-Holland, 1983).

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      United Kingdom, Board of Inland Revenue, Commissioners of H.M. Customs and Excise, Report for the Year Ended 31 March 1986, Cm. 5 (London: H.M. Stationery Office, November1986).

      United Kingdom, Board of Inland Revenue, Committee on Enforcement Powers of the Revenue Departments (Keith Committee), Report, Vols. 1 and 2, Cmnd. 8822 (London: H.M. Stationery Office, 1983).

      United Kingdom, Board of Inland Revenue, Department of Trade and Industry, Burdens on Business (London: H.M. Stationery Office, 1985).

      United Kingdom, Board of Inland Revenue, H.M. Customs and Excise, Value Added Tax: Second-Hand Works of Art, Antiques and Scientific Collections, Notice No. 712 (London, February1973).

      United Kingdom, Board of Inland Revenue, H.M. Customs and Excise, Value Added Tax: Construction Industry, Notice No. 708 (London, 1975).

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      United Kingdom, Board of Inland Revenue, H.M. Customs and Excise, Value Added Tax: Young Children’s Footwear and Clothing, Notice No. 714 (London, revisedSeptember1986).

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    Index

    Letters are used as follows: c for chart, n for footnote, and t for table

    • Aaron, Henry J., 220n, 225, 225n, 417

    • Administration, 233–69, 270–303, 304–23, 324–48: central vs. local, 239–45, 244c;

      • comparison of VAT with other taxes, 233–34;

      • costs, 268–69, 402: of United Kingdom VAT, 266t;

      • department responsible, 234–37: options for district level, 237–40, 238c, 239t, 240c;

      • district office: arrears, recovery of, 253–54, control, 251–52, filing, 252, inspectorate, 252–53, support staff, 254–55, visits to taxpayers, 252–54, 253t;

      • head office: data processing, 256, inspections, legal services, and management, 257–58, policy and research, 256–57;

      • identification numbers for taxpayers, 275–78;

      • integration of VAT with income tax, 239t, 240c;

      • organization charts, 238c, 240c, 244c, 246c;

      • planning charts, 263c, 264c;

      • regional office, 255;

      • registration of taxpayers, 16, 47–48. 132–34, 133c, 270–303, 402;

      • separate VAT operations, 236–37, 238c;

      • staffing: example of recruitment and placing of staff, 260c, factors affecting, 245–51, 246c, ratio of staff to taxpayers, 250, 250t, total staff and distribution, 258–59, 259t;

      • training, 265–68;

      • transitional staff problems, 261–68: recruitment and transfer, 261–62, 263c, VAT planning, 262–65, 263c, 264c, 409–16 (see also Computers, Control, Enforcement, Evasion, and Penalties)

    • Africa: financial services, 95, 98;

      • small businesses, 124t, 131;

      • VAT applied as in France, 398

    • Agriculture, 141–54: credit compensation, 143–44, 148t;

      • European Community’s flat rate compensation scheme, 142–47, 148t: invoices for, 146–47, problems with, 144–46;

      • exemptions: agricultural inputs, 52t, 53, 54, agricultural land, 81, small farmers and fishermen, 141, 399;

      • farm gate sales, 60–61, 312;

      • farmers: European Community definition of, 142n, treatment of, 81, 141, 142–47, 152–54, 399;

      • invoices, 146–47;

      • rates, 142, 147, 148t;

      • ratio of VAT on inputs to farm output, 148t;

      • record keeping by farmers, 141, 141n;

      • special problems of agriculture, 141–42, 152–54;

      • summary of agriculture under VAT, 148t;

      • zero rating of inputs, 52t, 59–61, 152–53, 399

    • Alverson, Terree, 227n, 228t(n), 417

    • Andersson, Krister, 208n, 417

    • Argentina: administration, 249;

      • agriculture, 148t;

      • audit, special, 299;

      • credit balances, 287;

      • effective rates, 48;

      • “equalization” tax scheme for small traders, 119;

      • exemptions, 52t, 98;

      • federal VAT system, 158, 399;

      • financial institutions, 98; forfait system for small traders, 120–21;

      • hard-to-tax groups, sample of, 275, 276t;

      • introduction of VAT: effect on prices, 194t, 211t;

      • name of VAT, 20n;

      • payment slips, 284;

      • penalties, automatic, 319, 320;

      • rates, 40t, 48;

      • returns, annual, 284–85;

      • revenue, l0t, 26t, 28t;

      • sales tax on manufacturing, 8;

      • small businesses: criteria for, 112, treatment of, 124t;

      • substitution for other taxes, 10t, 22;

      • tax credit for farm products, 151;

      • taxpayers as percent of population, 272t

    • Arnold, John, 362n, 363n, 417

    • Asia and Pacific: administrative changes for a VAT, 273;

      • agriculture, 148t;

      • small businesses, 124t;

      • supply of services, 387

    • Audit (see Compliance and Control)

    • Australia: goods and services tax, 23t;

      • identification numbers, proposed, 276–77;

      • increased reliance on direct taxes, 22;

      • rejection of VAT, 31, 34–35, 398;

      • sales taxes: single-stage, 15–17, wholesale, 17, 34–35

    • Austria: administration, 239t: agriculture, 148t;

      • farmers: accounting by, 141n, refunds for flat rate amount paid, 145;

      • goods and services tax, 23t;

      • government sector before and after VAT, 228t;

      • introduction of VAT: effect on prices, 194t, 211t, transitional measures, 184t;

      • rates, 40t, 124t, 148t;

      • revenue, 10t, 26t, 28t;

      • sales tax, single-stage, 15;

      • small businesses: options, 111, treatment, 124t, 131;

      • substitution for other taxes, 10t;

      • taxpayers as percent of population, 272t

    • Avery Jones, J.F., 369n, 417

    • Bakker, Carl, 94t(n), 417

    • Ballard, Charles L., 44n, 221n, 417

    • Bannock, Graham, 226n, 417

    • Barham, Vicky, 96n, 417

    • Barman, Kiran, 30n, 417

    • Barnard, James, 243n, 320n, 333n, 417

    • Belgium: administration, 239t, 242, 249, 402;

      • agriculture, 147, 148t;

      • buildings, 63t, 321;

      • computer system, 333;

      • construction industry, 86: evasion in, 312;

      • craftsmen’s trade, rates on, 105;

      • credit balances, accumulating, 287;

      • cultural activities, 75t;

      • enforcement, 242;

      • “equalization” tax for small traders, 119, 120;

      • evasion, 304n, 311, 312;

      • exemptions, 52t, 75t, 88, 130;

      • farmers: registration, 147, treatment, 147, 148t;

      • forfait system for small traders, 121, 131;

      • goods and services tax, 23t: excised goods, 46t;

      • government sector before and after VAT, 228t;

      • government-owned entities, 77;

      • introduction of VAT: effect on prices, 194t, 200–201, 211t, price freeze, 199, transitional measures, 184t, 185;

      • penalties, automatic, 319, 320;

      • policies, 200–201;

      • rates, 40t, 41, 48, 74, 88, 90, 105, 147, 148t, 200–201, 211t, 249: proposed reductions, 48, reduced, 75t;

      • receipts for supplied services, 356;

      • refunds of tax on inventories, 184, 184t;

      • registration compulsory, 270;

      • rental of accommodations, 88, 90;

      • retail stage, political overtones at, 122;

      • revenue, 10t, 26t, 28t, 161t;

      • sales tax, single-stage, 15;

      • small businesses, 122, 124t, 130, 134n;

      • substitution for other taxes, 10t, 22, 23, 200–201, 221–22;

      • tax increases, 22;

      • veterinary services, 72;

      • zero rating, 52t, 53, 55

    • Benin: method for calculating VAT, 5

    • Bertram, David, 368n, 369n, 417

    • Betting, gaming, and lotteries, 106

    • Bird, Richard M., 60n, 417

    • Bisonoi, Usha, 30n, 417

    • Bloomfield, Mark A., 32t(n), 33n, 34n, 417

    • Bolivia: cascading, avoidance of, 16;

      • credit against income tax, 305;

      • introduction of VAT: effect on prices, 194t, 211t;

      • manufacturers tax, 8;

      • payments, 284;

      • rates, 40t;

      • revenue, 10t, 26t, 28t;

      • ring system, 16;

      • small businesses, 124t;

      • substitution for other taxes, 10t

    • Bradford, David F., 417

    • Bragg, Richard J., 187n, 388n, 417

    • Brazil: administration, 245;

      • agriculture, 148t;

      • buildings, 63t, 65;

      • computer system, 327;

      • credit, disadvantages of, 219, 229–30;

      • federal manufacturers VAT, 7t, 20, 36;

      • federal VAT system, 156–57, 399;

      • forfait system, 121, 131;

      • introduction of VAT: effect on prices, 194t, 211t, tax on goods but not services, 388;

      • payments, 284;

      • rates, 40t, 47, 148t;

      • returns, monthly, 284;

      • revenue, 10t, 26t, 28t;

      • small businesses, 124t;

      • state retail VAT, 7t, 124t, 157: used to stimulate exports, 229;

      • substitution for other taxes, 10t;

      • utilities: electrical energy, 68

    • Brecher, Stephen M., 225n, 226n, 417

    • Brems, Ulla, 19n, 417

    • Browning, Edgar K., 198n, 417

    • Buckett, Alan, 363n, 364n, 368n, 417

    • Buildings, 6, 33, 56, 57t, 58t, 61–63, 63t, 64–66, 75, 78, 80–87 (see also Construction industry)

    • Butterworth, M.I., 354t(n), 417

    • Campbell, Colin, 391n, 393n, 417

    • Canada: accounts-based VAT proposed, 170–71, 400;

      • charities, 79;

      • consideration of VAT, 35–36, 39, 40t, 398, 400;

      • financial sector, 92;

      • goods and services tax, 23t: excised goods, 46t;

      • manufacturers sales tax, 15;

      • reliance on direct taxes, 22;

      • sales taxes: proposal for reform of, 170–71, retail, 36, single-stage 15, wholesale, 17, 35–36

    • Capital goods, 6, 15, 16, 182–84, 221–22

    • Casanegra de Jantscher, Milka, 169n, 233, 249n, 250n, 272t(n), 417

    • Cascade taxes: avoidance of, 16, 30;

      • and capital goods, 221–22;

      • definition, 9n;

      • defects in, 9n;

      • effect, cascading, 9–19, 10t, 151, 163, 168t, 178;

      • exports and, 16, 224–26;

      • sales tax and, 9–19, 10t, 151, 178: substitution of VAT for, 10t, 194t (see also Sales taxes)

    • Castellucci, Laura, 220n, 417

    • Catering, 88–90

    • Chakravarty, A., 30n, 417

    • Charities, 78–79

    • Chesnais, Bernard, 392n, 417

    • Chile: administration, 248;

      • agriculture, 148t;

      • audit, frequency of, 296;

      • credit for fixed assets, 286;

      • exemptions, 52t, 52t(n);

      • exporters, claim of refund by, 286;

      • farmers, treatment of, 141, 151;

      • forfait system for small traders, 119–20;

      • introduction of VAT: effect on prices, 194t, 211t, transitional measures, 184t;

      • invoices required, 280;

      • noncompliance of traders, 139–40;

      • payments, 284;

      • penalties, automatic, 319, 321;

      • rates, 40t, 148t: reduction in, 227;

      • refunds of tax on stocks not given, 178;

      • returns, monthly, 284;

      • revenue from VAT, 10t, 21, 26t, 28t;

      • small businesses, 119–20, 124t;

      • substitution for other taxes, 10t, 24;

      • taxpayers as percent of population, 272t;

      • transport tax, 67

    • Choi, Kwang, 16n, 417

    • Chronican, Phil, 94t(n), 417

    • Clothing, children’s, 52t(n), 70

    • Cnossen, Sijbren, 9n, 17n, 18n, 20n, 34n, 43n, 130n, 155, 159n, 161n, 178n, 183, 183n, 212n, 215n, 216n, 224n, 417

    • Colombia: agriculture, 148t;

      • audit, special, 299;

      • exemptions, 52t, 86, 98;

      • financial services, 98;

      • introduction of VAT: effect on prices, 194t, 211t, effect on taxes, 192;

      • manufacturers tax, 20;

      • manufacturing level, VAT applied at, 7t;

      • name of VAT, 20n;

      • payments, 284;

      • rates, 39, 40t, 98, 148t;

      • revenue, 10t, 26t, 28t;

      • secondhand automobiles, 103;

      • small businesses: criteria for, 111, simplified schemes for, 111, treatment of, 124t;

      • substitution for other taxes, 10t;

      • taxpayers as percent of population, 271, 272t;

      • zero rating, 52t

    • Compliance, 270–303, 349–64, 403: accounting errors, 315;

      • alternative tax coordination schemes, effect of, 168t;

      • audit: number, 296–97, procedures, 293–96, special for investigating, 296, 298, 299;

      • barter arrangements, 314–15;

      • comprehensive business tax really a VAT, 30;

      • computer-based case selection system for audit, 299–302;

      • costs of, 163, 351–53, 354t: for sales tax, 354t, for traders, 352;

      • credibility check by officials, 363–64;

      • cross-checking, 281, 282t, 284, 292, 320;

      • export claims, false, 313;

      • fake companies, 314;

      • invoice: importance as control document, 353;

      • multiple rates, problem of, 163, 313–14;

      • physical checks, 289;

      • profit margins, distortion of, 358, 358t;

      • receipts, requirement of, 356;

      • recordkeeping, reliability of, 361;

      • self-deliveries, omission of, 313;

      • underreporting, detection of, 300–301;

      • visits by officials, 296–98, 297t, 361–63 (see also Control, Enforcement, and Penalties)

    • Computers, 324–48, 403: accounts, computerized, 338–40;

      • advantages of computerization, 325–27;

      • approaches to computerizing, 327–28;

      • assumptions, basic, 332–36;

      • audit, case selection by computer for, 301–302, 310;

      • automated system: installation and management, 340–48, 344t, organization chart, sample, 342c, possible system, 340–48;

      • choice of system, 328–29;

      • computer output, typical, 330–32;

      • costs, 325–27: estimate of, in time and money, 344t;

      • cross-checking, 281, 282t, 284, 320;

      • efficiency, 325–28: savings, 326–27, uses, 326–27;

      • implementation of computer system, example of, 344t;

      • introduction of VAT, use of computers in, 409–16;

      • manual vs. computerized system, 326–27: master plan for system, 340–48, 342c, 344t;

      • organization chart for automated system, 342c;

      • personnel, 328, 336–37;

      • planning for, 329–30;

      • problems of computerization, 325–28;

      • procedures for operating system, 340–48;

      • quality, 337–38;

      • records, identification of, 277–78;

      • security, 337–38;

      • system design, 334–36;

      • training, 336–37;

      • user requirements, 330–32;

      • volume, annual, example of, 340–48 (see also Administration)

    • Construction industry, 62–65, 78, 80–87, 181, 312, 356 (see also Buildings and Housing)

    • Control, 270–303: audit, 288–303: definition, 289–90, first, 294–95, frequency of, 296–98, management of, 291–93, manual for, 303, number of, 296–98, physical checks, 289, preventive, 298, procedures, 293–96, purpose, 290, relation to income tax, 288–89, selection criteria, 298–302, type of, 291, visits by auditors, 296–98, 297t;

      • compliance, special audits for investigating, 296, 298, 299;

      • computer-based case selection system, 300–302;

      • credit mechanism, 285–88;

      • identification numbers, 275–78: key to computer system, 277, system of numbering, 277;

      • invoices, 279–81: cross-checking of, 280–81, 282t, prevention of black market in, 280, retail sales, 281–84, use of cash registers, 281–83;

      • nonregistration, penalty for, 274;

      • payment of tax, 284–88: frequency of returns, 284–85;

      • refunds, 284–88: balances from export operations, 285–86, 296, from purchase of equipment, 286–87, from temporary conditions, 287, from use of multiple rates, 286, from zero-rated goods, 286;

      • register, keeping up to date, 272, 274–75, 278–79;

      • registration of taxpayers: election to register, 275, exemption limit, 271, forms, 278, 407–408, purpose, 270–71, timing, 271–73, units of business, 273–74;

      • sample of hard-to-tax groups, 275, 276t;

      • taxpayers as percent of population, 271, 272t;

      • visits by officials, 278, 297t (see also Administration, Compliance, Enforcement, and Penalties)

    • Costa Rica: cascading, avoidance of, 16;

      • credit mechanism, 17;

      • exemptions, 52t: ice cream, 61;

      • introduction of VAT, 234n: effect on prices, 194t, 211t;

      • name of VAT, 20n;

      • rates, 40t, 41: reduction in, 24, 227;

      • returns, monthly, 294;

      • revenue, 10t, 26t;

      • ring system, 16, 17;

      • substitution for other taxes, 10t

    • Côte d’Ivoire: interest charges on bank credit, 98;

      • introduction of VAT: effect on prices, 194t, 211t;

      • manufacturing level, VAT applied at, 7t;

      • rates, 39, 40t, 41, 98: standard rate, 398;

      • revenue, 10t, 26t, 28t: small businesses, 124t;

      • substitution for other taxes, 10t

    • Craftsmen, 105–106

    • Cultural activities, 52t, 73–75, 75t: books, 73–74, 75t;

      • definition, 73, 75;

      • educational services, 52t;

      • exemptions from VAT, 52t, 75t;

      • professional services, 52t, 76;

      • rates, special, 75t

    • Customs unions: border VAT adjustments, 158–61;

      • clearing mechanism for intra-Community sales, 160, 161t;

      • domestic and foreign sales, 159;

      • foreign trade, 222–23;

      • international trade and VAT, 222–23, 226;

      • intra-Community trade, European Community proposal for, 160 (see also Exports and Imports)

    • Definitions, 365–96: audit, 289–90;

      • credit, 375;

      • credit cards, 375–83;

      • destination principie, 20, 158–59, 223;

      • difficult-to-tax goods, 80;

      • discounts, 374–75;

      • exemptions, 49–50;

      • finance houses, role of, 383–84;

      • free zones, 396;

      • goods, supply of, 386–87: deposit on, 383, “on approval,” 383;

      • groups of companies, 367–68;

      • invoices, 385–86;

      • liability to pay, 365–74;

      • “merit” goods, 69;

      • origin principle, 20, 158–59;

      • partnerships, 366–67;

      • promotional schemes, 384–85;

      • retailers, 109–10, 371;

      • “reverse charge” services, 101, 392;

      • self-supply, 372;

      • services, supply of, 387–89: distortions in, 392–93, international, 391–92, special cases, 393–96;

      • small traders, 110, 113–18;

      • supply: place of, 371–72, self-supply, 372, time of, 373, 376t, type of, 376t;

      • taxable activity, 186–87, 368–71;

      • taxable persons, 365–66, 368: clubs as, 367;

      • traders or businesses, 371;

      • value of goods and services supplied, 373–74, 389–96, 376t;

      • VAT, 4, 284–85, 289;

      • wholesalers, 109–10, 371;

      • zero rating, 49–50

    • Dekker, W., 226n, 417

    • Dengel, Annette, 203n, 417

    • Denmark: administration, 239t: use of customs and excise department, 401;

      • agriculture, 148t;

      • audit, 291;

      • barter arrangements, 314;

      • compensation, 220;

      • craftsmen’s trade, rates on, 105, 122;

      • cultural activities, 75t;

      • evasion: unreported farm sales, 312;

      • exemptions, 52t, 75t, 66, 88, 130;

      • farmers, treatment of, 81, 141, 147;

      • goods and services tax, 23t: excised goods, 46t;

      • government sector before and after VAT, 228t;

      • hotels, rentals of rooms in, 88;

      • introduction of VAT, 22: effect on prices, 194t, 201, 211t, 213;

      • leasing immovable property, 84t, 88;

      • payments, 284;

      • rates, 39, 40t, 201, 211t;

      • revenue, 101, 21, 22, 26t, 28t, 161t;

      • small businesses: treatment, 124t, turnover as criterion, 112, 124t, 130;

      • substitution for other taxes, 10t, 22, 201;

      • taxpayers as percent of population, 271, 272t;

      • zero rating, 52t, 53, 55

    • de Vries, Edo, 319n, 417

    • Dickson, Ian, 54n, 417

    • Dodd, Michael, 349n, 417

      • Dominican Republic: administration, 243;

      • exporters, use of balances by, 285;

      • rates, 40t;

      • substitution for other taxes, 10t

    • Douglas, Roger, 44, 44n, 54n, 174n, 206n, 207n, 233, 417

    • Due, John F., 18n, 19n, 37n, 112n, 243n, 296n, 301n, 310n, 397, 417

    • Economy, 214–30: compensation or credit, 218–20: problems with, 219;

      • direct tax replacement, 224–26;

      • distribution, 214–15;

      • efficiency, 220–21: VAT more efficient than income tax, 221;

      • government sector before and after VAT, 226–28, 228t;

      • investment, 221–22;

      • management, economic, 229–30: shift to VAT, 229–30;

      • neutrality, 220–21: credit for capital goods, 222;

      • regressivity, 215–20;

      • sales tax replacement, 223–24;

      • savings, 221–22, 225;

      • trade, foreign, 222–23: exports, 224–26, imports, 226 (see also Introduction of VAT and Prices)

    • Ecuador: agriculture, 148t;

      • introduction of VAT: effect on prices, 194t, 211t, tax on goods but not services, 388;

      • name of VAT, 20n;

      • rates, 40t, 148t;

      • returns, monthly, 284;

      • revenue, 10t, 26t, 28t;

      • substitution for other taxes, 10t;

      • tax for small traders determined by tax administration, 121;

      • taxpayers as percent of population, 272t

    • Edwards, J.S.S., 92n, 417

    • Edwards, Stephen, 368n, 369n, 417

    • Egypt: manual vs. computer system, 327

    • Enforcement, 315–19: assessments by authorities, 316;

      • entry and search, power of, 317–18;

      • justification for, 315–16;

      • recordkeeping requirements, 316–17 (see also Control, Evasion, and Penalties)

    • Equity, 49–67, 58–60, 151, 220, 305

    • Europe: agriculture, 148t;

      • businesses, 117, 124t;

      • evasion: average amount, 305, schemes for, 140, underreporting, 311;

      • excised goods: members of Organization for Economic Cooperation and Development, 46t;

      • invoice, no official form for, 355;

      • price of residential property, effect on, 62;

      • relief for inventory stock and capital goods, cost of, 182;

      • retail stage, extension through, 398;

      • retailers, schemes for, 140;

      • taxes of socialist regimes, 24: VAT in, 274;

      • VAT form, influence of. 397–98

    • European Community: accounting for VAT, proposed scheme of, 137–38;

      • agriculture: specialists, 147, treatment of, 81, 142–47, 148t;

      • association with VAT, 3, 20n: model VAT, 4;

      • book keeping requirements, 359;

      • choice of VAT by member states. 19–20, 20n, 122;

      • clearing mechanism for intra-Community trade, 160–61, 161t;

      • construction industry, 82, 86;

      • credit balances, 287–88: Directives on, 287–88;

      • cultural activities, 73–75, 75t;

      • Directives of Council, 355, 359: Second, 50–51, 53, Sixth, 54, 66, 67, 69, 71, 76, 77, 81, 82–83, 84t, 87, 110, 122–23, 142–44, 142n, 145, 147, 152n, 287–88, 306–307, Seventh, 102–103, 103n, Eighth, 101, 145, Tenth, 91, Twentieth, 146n;

      • evasion, prevention of, 306;

      • Directives on, 306, 306n;

      • exemptions, 50–53, 56, 75t, 86, 98–99: criteria for enterprises, 111–12, 122–23, transactions, 57t, 58t;

      • farmers, flat rate scheme for, 142–44, 142n:

      • monitoring of, 143, 247, problems with, 144–46;

      • financial services, options for taxing, 98: exclusion from VAT, 99, Directive on, 87, 89–90, for those outside Community, 391;

      • flat rate credit compensation, 53, 142–46: calculation of, 143–44, Directives on, 142–44, 142n;

      • government purchases and sales, 76–78: Directive on, 77;

      • harmonization of VAT schemes, 111, 120, 131, 159, 165;

      • invoices showing amount of VAT, 281, 283, 355;

      • land, 81;

      • leasing goods, 90–91: Directive on, 91;

      • leasing immovable property, right of option for taxation, 84t, 87: Directive on, 87, 89–90;

      • medical and veterinary services, 71–73: Directive on, 71–73;

      • origin principle of levying VAT, 158, 165;

      • prices for retail sales VAT inclusive, 281;

      • rates, 41, 48, 75t, 105–106, 163n, 164: harmonization of, 48, 102–103, 159;

      • recordkeeping, 317, 359;

      • retailers, small, treatment of, 122–32, 124t, 135;

      • “reverse charge” services, 100–101;

      • revenue flows from clearing mechanism, 161t;

      • secondhand goods, proposed harmonization of, 102–103;

      • small businesses, 122–32, 124t, 135: Directive on, 122–23;

      • temporary imports, 395;

      • transfer tax on housing sales, 65;

      • transport of goods, Directive on, 67;

      • VAT payments by member states to finance Community, 145, 164;

      • veterinary services, 72–73;

      • vs. Italy, 73;

      • vs. United Kingdom, 55, 65–66, 86;

      • zero rating: arguments against, 54–55, of food, 59, of services performed abroad, 100–101

    • Evasion, 304–23: accounting errors, 315;

      • barter arrangements, 314–15;

      • cash purchases, unrecorded, 308;

      • credit claims: exaggerated, 307–308, falsified, 308–11;

      • estimates of evasion, 304;

      • examples of evasion, 307t, 319t;

      • export claims, false, 313–14;

      • invoices: fake, 304, of fake companies, 314, from unregistered suppliers, 308;

      • nonregistration, 306–307, 307t;

      • nonremittance of tax collected, 312;

      • omission of self-deliveries, 313;

      • prevention of evasion, 306;

      • public attitudes toward evasion, 305–306;

      • underreporting, 310–12: problem of multiple rates and incorrect descriptions, 313;

      • unreported sales, 310: on goods imported illegally, 310 (see also Control, Enforcement, and Penalties)

    • Excise duties and VAT, 24, 45–46, 46t

    • Exemptions, 49–68, 52t, 69–79, 80–107: agricultural inputs, 52t, 53, 54;

      • agricultural land, 81;

      • businesses, the smallest, 118–22;

      • charities, 78–79;

      • children’s clothing, 70;

      • craftsmen’s trade, 105–106;

      • credit claims, 308–10;

      • criteria for enterprises, 111–13;

      • cultural activities, 73–75, 75t;

      • definition, 49, 51;

      • equity considerations, 49–53: for farmers, 151;

      • European Community and, 56, 57t, 58t;

      • examples of, 49–68. 52t;

      • financial services, options for. 94t, 98;

      • food, 59–61;

      • goods and services, 50–63, 58–59: “merit” goods, 69–79;

      • government purchases and sales, 52l, 75–78;

      • housing, 61–66, 63t;

      • justifications for, 56;

      • medical and veterinary services, 71–73;

      • nonprofit organizations, 78–79;

      • properly, new and old, 61–66, 63t;

      • small traders, criteria for, 111–13;

      • transport, public, 66–67;

      • utilities, 58, 68;

      • zero rating and, 49–68, 52t, 69–79, 80–107 (see also Zero rating)

    • Exports: balances from export operations, 285–86;

      • cascade taxes vs. VAT, 16, 224;

      • claims, false, 313–14;

      • comparative advantage under VAT, 224–26;

      • customs unions, 158–61, 226;

      • deductions of VAT from, 158;

      • destination principle, 158–59, 233;

      • exemption from VAT, 53, 229–30;

      • federal systems, 155–58;

      • foreign trade, 222–23;

      • invoices of fake companies, 315;

      • refunds, 186, 224, 285–86, 298, 395;

      • stimulation of, 224–25, 229;

      • tourists, sales to, 397–98;

      • valuation of, 389–90;

      • zero rating, 52t, 53, 389–90 (see also Imports)

    • Ferron, Mark J., 47n, 417

    • Financial services, 52t, 92–101, 94t, 97t: agents, 91–92;

      • alternative tax for, 98: advantages and disadvantages, 98–100;

      • banking, 92–95;

      • Black Box arrangement, 92;

      • brokers’ services, 92, 93n;

      • exclusion from VAT, 97–99;

      • exemption, benefit of, 100;

      • insurance, 92, 94t, 95–97: insurers in New Zealand before and after VAT, 97t;

      • optional forms of VAT for, 92–95, 94t; “reverse charge”

      • services, 100–101;

      • selective VAT application, 95–97;

      • services performed abroad, 100–101;

      • taxation, full, in Israel, 93–95: advantages and disadvantages, 95;

      • zero rating, 100–101

    • Finland: goods and services tax, 23t;

      • price tax inclusive, 8;

      • rate, effective, 45

    • Fishbein, Bette K., 216n, 417

    • Food: agricultural inputs, 52t, 53, 54, 59–61;

      • commodities, 47t, 52t, 61, 92, 218;

      • consumption tax, 16;

      • definition, 59–60;

      • exemption from VAT, 51, 52t, 59–61;

      • expenditure on, in Ireland, 217t;

      • farm gate sales, 60–61, 312; forfait system, 120–21;

      • hotels and restaurants, food and drinks in, 89, 312;

      • processed and unprocessed, 60;

      • scheme for retailers of, 119;

      • specific, 60;

      • taxing of, 221;

      • zero rating, 52t, 59–61, 2l7t

    • Forte, Francesco, 417

    • France: administration, 239t, 250t;

      • agriculture, 147, 148t;

      • assessment by authorities, 316;

      • banks, tax on credit of, 95, 98, 99;

      • craftsmen’s trade, rates on, 105;

      • credit balance, buffer rule for, 287;

      • credit mechanism, 17;

      • cultural activities, 75t;

      • evasion;

      • unreported farm sales, 312;

      • exemptions, 52t, 64, 66n, 75t, 88, 130;

      • farmers, accounting by, 141n, 147;

      • first country to use VAT, 9;

      • foreign taxable persons, 392;

      • forfait system for small traders, 121, 131;

      • goods and services tax, 23t;

      • excised goods, 46t;

      • government sector before and after VAT, 228t;

      • hotel accommodations, 88;

      • introduction of VAT: effects on prices, 194t, 202, 211t, transitional measures, 184t;

      • leasing immovable property, 841, 88;

      • penalties, automatic, 319: late payment, 319;

      • policies, 201, 202;

      • prices: tax inclusive originally, 8, VAT and, 194t, 202, 211t;

      • rates, 40t, 67, 72, 88, 90, 98, 105, 148t;

      • reduced, 75t;

      • ratio of VAT staff to taxpayers, 250t;

      • recordkeeping, 317;

      • regressivity, 216;

      • retail stage, political overtones at, 122;

      • revenue, 10t, 26t, 28t, 161t;

      • ring system, 17;

      • secondhand sales, 104;

      • small businesses: number of employees as criterion, 112, treatment of, 122, 124t, 130, 131;

      • substitution for other taxes, 10t, 202, 221–22;

      • tax increases, 22;

      • taxpayers as percent of population, 272t;

      • transport: of goods, 66n, passenger, 67

    • Frenkel, Jacob A., 229n, 417

    • Galvin, Charles O., 32t, 32t(n), 32n, 417

    • García Azcárate, Tomas, 144n, 417

    • General Agreement on Tariffs and Trade (GATT): discrimination on traded goods, 45;

      • tax neutrality of VAT, 21;

      • VAT under GATT rules, 167, 224

    • Germany, Federal Republic of: administration, 239t, 245, 248;

      • agriculture: treatment of as EC member state, 145–46, 146n, under VAT, 148t;

      • assessment by authorities, 316;

      • audit of small traders, 297;

      • buildings, 63t;

      • compliance costs, 117;

      • compensation to exporters, 224, 224n;

      • computerization problems, 329;

      • craftsmen’s trade, rates on, 105;

      • cultural activities, 75t;

      • exemptions, 52l, 66n, 75t, 130;

      • exports, 225;

      • farmers, compensation for, 145;

      • federal VAT system, 155–56, 399–400: revenue sharing, 165;

      • foreign taxable persons, 392;

      • goods and services tax, 23t: excised goods, 46t;

      • government sector before and after VAT, 228t;

      • hotels, campsites, and parking spaces, 88–89;

      • insurance premiums, 98;

      • introduction of VAT: effect on prices, 194t, 202–203, 211t, transitional measures, 184t;

      • leasing immovable property, 84t, 88;

      • policies, 202–203;

      • prices, 194t, 202–203, 211t;

      • rates, 40t, 67, 88, 98, 105, 124t, 202–203: reduced, 75t;

      • recordkeeping, 317;

      • revenue, 26t, 28t, 161t;

      • small businesses, 122, 124t;

      • substitution for other taxes, 10t, 202–203, 221–22;

      • taxpayers as percent of population, 272t;

      • transfer tax, 62, 63t;

      • transport: of goods, 66n, tax, 66;

      • warrant for entry and search, 318

    • Gillis, Malcolm, 36n, 417

    • Goode, Richard, 222n, 417

    • Goods and services, 23t, 69–79, 80–107, 371–73, 376t, 386–96: capital goods, 6;

      • charities, 78–79;

      • children’s clothing, 52t(n), 70;

      • cultural activities, 52t, 73–75, 75t;

      • difficult-to-tax goods, 80–107;

      • excised goods, 46t;

      • exemptions, 52t, 58–68;

      • exports: treatment of, 389–91, valuation of, 389–90;

      • financial services, 376t, 396;

      • foreign trade, 222–23;

      • free zones, 396;

      • government: purchases and sales, 75–78, subsidies and grants, 376t, 396;

      • imports: temporary, 394–95, valuation of, 389–90;

      • international services, 376t, 389–96: distortions, 392–93, special cases, 393–96;

      • medical and veterinary services, 71–73;

      • “merit” goods, 69–79;

      • nonprofit organizations, 78–79;

      • rates, 52t, 74, 75t;

      • supply, 371–73, 376t: of goods, 386–87, of services, 387–89;

      • tax, in New Zealand, 20n, 23t, 92, 206, 220;

      • taxes on, as percentage of total taxation, 23t;

      • tourists, treatment of, 393–94;

      • transport, 66, 66n, 395–96;

      • value of, 373–74, 376t, 389–90;

      • zero rating, 58–68, 69–79 (see also Capital goods, Exemptions, Trader’s point of view, and Zero rating)

    • Godwin, Michael R., 354t, 354t(n), 417

    • Gordon, Leon, 417

    • Government: adopting VAT, reasons for, 9–19, for not adopting, 30–38;

      • compliance costs, 352–54, 354t;

      • countries without a VAT, 30–38;

      • expenditure, 227–28, 228t;

      • purchases and sales, 52t, 75–78: of buildings, 78;

      • return, sample, 407–408;

      • revenue from VAT: as percentage of GDP, 28t, as percentage of total taxes, 23t, 26t, source for government, 21–24;

      • schedule for introduction of VAT, 409–16;

      • size of sector before and after VAT, 226–28, 228t;

      • substitution of VAT for other taxes, 9–15, 101, 14t, 24–30 (see also Economy and Introduction of VAT)

    • Gravelle, Jane G., 417

    • Greece: administration, 239t, 402;

      • banking, taxation of, 98;

      • goods and services tax, 23t;

      • insurance premiums, tax on, 98;

      • introduction of VAT, 20n, 31;

      • medical services, 72;

      • price tax inclusive, 358;

      • rates, 39, 40t, 98, 159;

      • revenue, 161t;

      • small businesses, 124t;

      • substitution for other taxes, 10t

      • Greene, Leonard M., 216n, 417

    • Grenada: rate, effective, 45;

      • substitution for other taxes, 10t;

      • VAT not really a VAT, 6, 7t, 30

    • Guatemala: introduction of VAT: effect on consumer price index, 211t;

      • rates, 40t;

      • revenue, 10t, 26t, 28t;

      • substitution for other taxes, 10t

    • Guerard, Michèle, 68n, 417

    • Haig, Robert M., 354t, 354t(n), 417

    • Haiti: introduction of VAT: effect on consumer price index, 211t;

      • rates, 40t;

      • revenue, 10t, 26t, 28t;

      • substitution for other taxes, 10t, 24;

      • taxpayers as percent of population, 271, 272t

    • Hall, Robert E., 219n, 417

    • Han, Seung Soo, 224n, 417

    • Hardwick, Peter J.W., 354t(n), 417

    • Heian, Betty C., 417

    • Heller Peter S., 216n, 417

    • Hemming, Richard, 16n, 44n, 212n, 216n, 221n, 417

    • Herschel, Federico J., 276t(n), 417

    • Hicks, Alastair, 103n, 417

    • Holland, J.C., 417

      • Honduras: cascading, avoidance of, 16;

      • credit mechanism, 17;

      • introduction of VAT: effect on prices, 194t, 211t;

      • name of VAT, 20n: rates, 40t;

      • returns, monthly, 284;

      • revenue, 10t, 26t, 28t;

      • ring system, 16, 194t;

      • small businesses, 124t;

      • substitution for other taxes, 10t

    • Hotels and rental accommodations, 9, 88–90, 312, 376t, 396

    • Housing, 52t, 61–66, 63t, 80–87: alterations, 83;

      • buildings, treatment of. 63t;

      • construction, 62–66, 80–87;

      • exemptions from VAT, 52t, 61–66;

      • existing, 65;

      • liability to VAT, 61–62;

      • low cost, 82, 86;

      • new, 65, 221;

      • publicly owned, 65;

      • purchases of, 52t;

      • rental, 52t;

      • transfer tax in lieu of VAT, 65;

      • zero rating, 52, 52t, 55, 65, 83 (see also Buildings and Construction Industry)

    • Hoyle, Michael M., 225n, 226n, 417 (see Brecher)

    • Hufbauer, Gary, 225, 225n, 417

    • Hungary: administration, 402;

      • computer system, 332;

      • credit method, 25;

      • first socialist regime to adopt VAT, 25;

      • introduction of VAT: concern over effect on prices, 200, transitional measures, 184t;

      • payment slips, 284;

      • rates, 40t;

      • substitution for other taxes, 10t, 24

    • Iceland: agriculture under proposed VAT, 148t;

      • consideration of VAT, 37, 39, 40t, 398;

      • retail sales tax, 18

    • Imports: customs form replacing invoice, 355;

      • customs unions, 159–61, 226;

      • foreign trade, 222–23;

      • postponed accounting for imporlers, 226, 384;

      • sales tax for importers, 16–17;

      • taxation at full VAT rate, 158;

      • temporary, 394–95;

      • time of levy, 389–90;

      • valuation, 389–90; VAT claimed by exporters, 285–86 (see also Exports)

    • India: manual vs. computer system, 327;

      • MODVAT, 30, 155;

      • substitution for other taxes, 10t;

      • VAT not really a VAT, 6, 7t, 30, 36

    • Indonesia: administration, 249;

      • audit, high frequency of, 297;

      • cascading, avoidance of, 16;

      • computerization, 328, 329;

      • exemption of automobiles used as taxis, 50;

      • introduction of VAT: effect on prices, 194t, 211t, price change estimates, 199, tax on goods but not services, 388, transitional measures, 184t;

      • manufacturing level, VAT applied at, 7t;

      • payment with return, 284;

      • rates, 40t, 249;

      • refunds of tax on stocks not given, 178;

      • retail stage, consideration of VAT extension to, 110;

      • revenue, 10t, 26t, 28t;

      • ring system, 16;

      • small businesses: criteria for exemption. 111, treatment of, 124t;

      • substitution for other taxes, 10t, 24

    • Introduction of VAT: administration and staffing, 233–69;

      • adopting, reasons for, 9–19, for not adopting, 30–38;

      • computer system, 324–48;

      • countries not adopting VAT, 30–38;

      • Australia, 34–35, Canada, 36, Iceland, 37, Japan, 36–37, United States, 31–34, 32t;

      • economy, effects on, 214–30;

      • form of VAT, 8–9. 29;

      • government sector before and after VAT, 226–28, 228t;

      • identification numbers for taxpayers, 275–78;

      • prices, effects on, 185–86, 194t, 200–13, 211t;

      • return, sample, 407–408;

      • revenue source, 10t, 23t, 24–25, 26t: as percentage of GDP, 28t, as percentage of total taxes, 26t: schedule for, 409–16;

      • status as of January 1, 1988, 40t;

      • substitution for other taxes, 9–15, 10t, 14t, 24–30: tax evolution and efficiency, 24–30;

      • transitional problems, 172–87, 184t (see also Transitional problems)

    • Ireland: administration, 239t, 243, 250, 250t;

      • agriculture, 146n, 148t;

      • buildings, 63t, 64, 83;

      • catering, 90;

      • children’s clothing, 52t(n), 70;

      • computer system, 250, 327;

      • craftsmen’s trade, rates on, 105;

      • cultural activities, 75t;

      • evasion, average amount of, 305;

      • exemptions, 52t, 75t, 66, 89, 98, 130;

      • farmers, accounting by, 141n;

      • food, expenditures on, 217t;

      • free zone, earliest, 396;

      • gambling, 106;

      • goods and services tax, 23t: excised goods, 46t, imported goods, 226;

      • government sector before and after VAT, 228t;

      • hotel accommodations, 89, 90;

      • introduction of VAT, 20n: effect on prices, 194t, 203–204, 211t, 213, profit margin control, 199, publicity for, 173, transitional measures, 184t;

      • leasing immovable property, 84t, 89;

      • medicines, 71–72;

      • penalties: automatic, 319, offenses liable to, 318, 319t;

      • policies, 203–204;

      • prices, 194t, 211t, 213: National Prices Commission, 199, 203–204;

      • rates, 40t, 41, 42, 91, 105, 163n, 164, 203–204, 211t, 398: reduced, 75t;

      • ratio of VAT staff to taxpayers, 250t;

      • revenue, 10t, 26t, 28t, 161t, 400–401;

      • small businesses, 122, 124t;

      • substitution for other taxes, 10t, 22, 23, 203;

      • taxpayers as percent of population, 272t;

      • Transition to VAT, Advisory Council on, 204;

      • transport: of goods. 67, passenger, 67;

      • veterinary services, 72;

      • zero rating, 52t, 53: of drugs, 72, of food, 59, 216, 2l7t

    • Israel: administration, 235–36: use of customs and excise department, 401;

      • compensation, 220;

      • financial services, full taxation of, 93–95: advantages and disadvantages, 95, annual base, 99;

      • introduction of VAT: effect on prices, 1941, 211t;

      • rates, 40t, 235–36;

      • revenue, 10t, 26t, 28t;

      • substitution for other taxes, 10t

    • Italy: administration, 220, 220n, 239t, 241, 250t;

      • agriculture, 148t;

      • banking and insurance, 98;

      • craftsmen’s trade, rates on, 105;

      • cultural activities, 75t;

      • European Community’s suit against Italy, 73;

      • evasion: estimates of, 304, in restaurants and hotels, 312, 321, 386;

      • exemptions, 52t, 67, 89;

      • exports, 225;

      • farmers, accounting by, 141n;

      • goods and services tax, 23t: excised goods, 46t;

      • government sector before and after VAT, 228t;

      • introduction of VAT, 20: effect on prices, 194t, 211t, transitional measures, 184t;

      • management, economic, 229;

      • progressivity, 220;

      • rates, 39, 40t, 41, 72, 88, 90, 105, 121, 229, 249: special, 75t;

      • ratio of VAT staff to taxpayers, 250t;

      • recordkeeping, 317;

      • revenue from VAT, 10t, 26t, 28t, 161t;

      • substitution: for other taxes, 10t, 22, 221–22, for social security contributions, 226;

      • tax increases, 22;

      • taxpayers as percent of population, 272t;

      • veterinary services, 72, 73;

      • warrant for entry and search, 318;

      • zero rating, 52t, 53, 55

    • Jap, Kim Siong, 355n, 417

    • Japan: consideration of VAT, 30–31, 36–37, 39, 40t, 398;

      • goods and services tax, 23t: excised goods, 46t, 47;

      • identification numbers for taxpayers rejected, 275–76, 278;

      • proposals for VAT, 9, 10t, 30–31, 36–37, 40t, 121, 275–76;

      • rates proposed, 39, 40t, 121;

      • small businesses: treatment of, 121, 124t, turnover as criterion for, 112;

      • substitution for other taxes rejected, 10t;

      • tax increases, 22

    • Jenkins, Glenn, 5n, 24n, 417

    • Johnson, William R., 198n, 417

    • Johnstone, Dorothy, 258n, 417

    • Kay, John A., 16n, 44n, 2l2n, 216n, 221n, 417

    • Kenya: single-stage VAT, 7

    • Korea: administration, 243, 249, 250, 402;

      • compensation to exporters, 224;

      • computerization, 250, 328;

      • consumption tax, 16;

      • cross-checking by computer, 281, 282t, 284;

      • exemptions, 52t, 67, 89;

      • evasion, cross-checking for, 304;

      • financial transactions, 98, 99;

      • first VAT in Asia, 204–205;

      • introduction of VAT: effect on prices, 194t, 211t, price change forecasts, 192, 198–99, price freeze. 199, publicity for, 173, test runs, 174–75, transitional measures, 184t;

      • invoices, control of, 281, 282t, 284;

      • leasing houses and land, 89;

      • penalties for evasion, 307t;

      • policies, 204–205;

      • prices, 192, 194t, 198–99, 204–205, 211t;

      • rates, 40t, 41, 98, 205, 249: by industry, 119t, for small traders, 119;

      • refunds of tax on stocks, 178;

      • regressivity, 216;

      • retailers, cash registers for, 283;

      • revenue, 10t, 26t, 28t;

      • sales tax on manufacturing, 8;

      • secondhand goods taxable, 103;

      • small businesses: compliance costs, 117, special schemes for, 111, 136–37, treatment of, 124t, 136–37;

      • substitution for other taxes, 10t, 16, 24, 204–205;

      • temporary imports, 395;

      • transport, passenger, 67;

      • taxpayers as percent of population, 272t;

      • zero rating, 52t, 53

    • Land, 63–65, 80–82

    • Latin America: administration, 234, 243, 247, 248, 326;

      • adoption of VAT, 20, 20n;

      • agriculture, 148t, 151;

      • Andean Pact, 20;

      • exemptions: of agricultural inputs, 53, of leasing immovable property, 89, of smallest businesses, 118;

      • farmers, treatment of, 151;

      • financial transactions, stamp taxes on, 98;

      • harmonization, 20;

      • invoices issued to final consumer, 356;

      • Latin American Integration Association (LAIA), 20;

      • noncompliance of traders, results of, 139–40;

      • rates, 46, 148t;

      • retail stage: exemption of smallest traders, 118, extension through, 399, simplified invoices for, 386, small traders, 110;

      • secondhand goods taxable, 103;

      • small businesses. 110, 118, 124t;

      • zero rating, 54 (see also Western Hemisphere)

    • Leasing, 52t, 84t, 87–92: agents, 90–92;

      • goods, 90–92;

      • hotel accommodations, 88–90;

      • housing, rental, 52t;

      • immovable property, 84t, 87–90

    • Lee, Catherine, 161n, 417

    • Liability, 365–96: business tests, 368–70;

      • calculation of sales by small retailers, 167, 385–86;

      • credit sales, 385–86;

      • debatable cases, 370–71;

      • goods and services: international, 376t, 389–96, supply of, 371–73, 386–89;

      • groups of companies, 367–68;

      • invoices, role of, 385–86;

      • partnerships, 366–67;

      • taxable activity, 368–71: tests for, 368–70;

      • taxable persons, 365–66: clubs as, 367;

      • time of supply provisions, 373, 376t;

      • traders or businesses, 371 (see also Control, Enforcement, and Penalties)

    • Lienard, Jean-Louis, 216n, 417

    • Lindholm, Richard W., 32t, 32t(n), 33, 33n, 417

    • Longo, Carlos A,. 20n, 417

    • Lukács, József, 25n, 417

    • Luxembourg: administration, 146n, 239t;

      • agriculture, 148t;

      • buildings, 63t: craftsmen’s trade, rates on, 105;

      • cultural activities, 75t;

      • exemptions, 52t, 130;

      • goods and services tax, 23t: excised goods, 46t;

      • introduction of VAT: effect on prices, 194t, 211t, transitional measures, 184t;

      • leasing immovable property, 84t;

      • rates, 40t, 67, 72, 91, 105: special, 75t;

      • revenue, 10t, 26t, 28t, 161t;

      • sales tax, single-stage, 15;

      • secondhand automobiles, 104;

      • small businesses, 124t, 130, 131;

      • substitution for other taxes, 10t, 22;

      • transport tax, 69

    • Madagascar: exemptions, 52t;

      • forfait system for small traders, 120–21, 120n;

      • introduction of VAT: effect on prices, 194t, 211t;

      • rates, 40t;

      • revenue, 10t, 26t, 28t;

      • small businesses, 124t;

      • substitution for other taxes, 10t

    • Makino, Yo, 36n, 417

    • Matthews, Milton P., 353, 354t, 354t(n), 417

    • Mauritania: method for calculating VAT, 5

    • Mauritius: computer system, 326

    • Mayer, C.P., 92n, 417

    • McClure, Charles E., Jr., 4n, 31n, 32, 32t, 32t(n), 32n, 33, 33n, 69n, 162n, 165n, 166n, 167n, 168t(n), 169, 169n, 172, 218n, 219n, 221n, 417

    • Medical and veterinary services, 52t, 71–73

    • Messere, Kenneth C., 216n, 417

    • Mexico: administration, 245, 249, 402;

      • buildings, 63t;

      • credit, disadvantages of, 219;

      • exemptions, 52t, 52t(n);

      • federal VAT system, 159, 399–400; forfait system for small traders, 120–21, 131;

      • introduction of VAT: effect on prices, 194t, 211t, price change estimates, 198–99, transitional measures, 184t;

      • invoices, proposed cash registers for, 283;

      • name of VAT, 20n;

      • rates, 40t, 47, 249;

      • returns, filing of, 284–85;

      • revenue, 10t, 26t, 28t, 117;

      • sales taxes, single-stage, 15;

      • small businesses, 120–21, 124t;

      • substitution for other taxes, 10t, 24;

      • zero rating, 52t

    • Meyer, Carrie, 243n, 417

    • Middle East: excises preferred to sales taxes, 24;

      • Israel only country with VAT, 398;

      • sales taxes not adopted, 398;

      • supply of services, 387

    • Miles, Colin, 226n, 417

    • Monson, Terry D., 417

    • Moore, Donald W., 225n, 226n, 417 (see Brecher)

    • Morgan, David R., 34n, 417

    • Morocco: administration, 243;

      • exemptions, 52t: hotels and tourist establishments, 89;

      • interest on bank loans and fees, 95;

      • introduction of VAT: effect on prices, 194t, 211t, price change estimates, 198–99;

      • rates, 40t, 89, 95;

      • revenue, 10t, 26t, 28t;

      • sales taxes: manufacturers, 8, single-stage, 15;

      • small traders, turnover as criterion for, 112;

      • substitution for other taxes, 10t;

      • transitional problem of illegal stocks, 182n;

      • wholesale stage, VAT applied through, 6, 7t;

      • zero rating, 52t

    • Murray, Russell G., 218n, 417

    • Musgrave, Richard A., 21n, 193, 193n, 417

    • Mutén, Leif, 276n, 417

    • Nellor, David, 227n, 417

    • Nelson, Robert H., xi, 417

    • Netherlands: administration, 239t, 250t;

      • agriculture, 148t;

      • assessment by authorities, 316;

      • audit, 288;

      • buildings, 63t;

      • claims, fake, 307;

      • craftsmen’s trade, rates on, 105–106;

      • cultural activities, 75t;

      • educational visits by officials, 176;

      • exemptions, 52t, 130;

      • farmers, accounting by, 141n;

      • goods and services tax, 231: excised goods, 46t;

      • government sector before and after VAT, 228t;

      • introduction of VAT: effect on prices, 194t, 205–206, 211t, neutrality of, 215, price freeze, 199, publicity for, 173, transitional measures, 184t, 185;

      • leasing immovable property, 84t: policies. 205–206;

      • rates, 40t, 72, 105, 205–206, 211t: special, 75t;

      • ratio of VAT staff to taxpayers, 250t;

      • recordkeeping, 317;

      • refunds of turnover tax, 178, 183, 185;

      • retail stage, political overtones at, 122;

      • revenue, 10t, 26t, 28t, 161t;

      • sales taxes, single-stage, 15;

      • small businesses: accounting by, 111, treatment of, 122, 124t, 130, 131;

      • substitution for other taxes, 10t, 205–206, 221–22;

      • taxpayers as percent of population, 272t;

      • veterinary services, 72;

      • zero rating, 521, 53

    • New Zealand: administration, 237, 239t, 243, 247, 249;

      • agents, liability of, 391;

      • agriculture, 148t;

      • anticipation of VAT by traders, 349–51;

      • assessment by authorities, 316;

      • bad debts, no tax on, 386;

      • buildings, 63t: compensation for the poor, 218, 219–20;

      • compliance costs, 351;

      • efficiency of VAT, 399;

      • exemptions, 52t;

      • farmers, treatment of, 81, 141, 153, 247;

      • financial sector, 92, 94t;

      • goods and services tax, 20n, 23t, 92, 206, 220;

      • groups of companies, 367–68;

      • insurance, tax on, 96–97, 97t;

      • introduction of VAT, 31: effect on prices, 194t, 200, 206–207, price change estimates, 198–99, publicity for, 173, 173n, 174, subscriptions, membership, 186;

      • land and buildings fully liable, 81: name of VAT, 20n;

      • policies, 206–207;

      • prices: tax inclusive, 358, VAT and, 194t, 198–99, 200, 206–207: racing, 107n;

      • rates, 40t, 44, 148t, 249;

      • recordkeeping, 316, 317;

      • refunds of tax on stocks, 178: qualifying stocks of construction industry, 181;

      • registration: decision chart for small traders, 133c;

      • sales taxes, single-stage, 15, 17;

      • secondhand goods, definition of, 103, 104;

      • small businesses, 124t, 132, 133c;

      • substitution for other taxes, 10t, 22, 205–206;

      • supply, concepts of, 372, 376t;

      • supply, value, and consideration, 376t, 389;

      • taxable activity, tests for, 368–70;

      • taxpayers as percent of population, 271, 272t;

      • wholesale taxes, 17

    • Nicaragua: cascading, avoidance of, 16;

      • credit mechanism, 17;

      • introduction of VAT: effect on prices, 194t, 2llt;

      • rates, 40t;

      • returns, monthly, 284;

      • revenue, 10t, 26t;

      • ring system, 16;

      • small businesses, 124t;

      • substitution for other taxes, 10t

    • Niger;

      • exemptions, 52t;

      • forfait system for small traders, 120–21, 120n;

      • rates, 39, 40t, 41: standard rate, 398;

      • revenue, 10t, 26t, 28t;

      • substitution for other taxes, 10t;

      • taxpayers as percent of population, 271, 272t

    • Nigeria: consideration of VAT, 36

    • Norway: administration, 239t;

      • agriculture, 148t;

      • compensation, 220;

      • exemptions, 52t, 89, 130;

      • goods and services tax, 23t: excised goods, 46t;

      • government sector before and after VAT, 228t;

      • hotels, provision of food and drinks in, 89, introduction of VAT: effect on prices. 194t, 2llt, transitional measures, 184t: rates, 40t;

      • revenue, 10t, 26t, 28t;

      • sales tax, retail, 18–19;

      • small businesses, 124t, 130;

      • substitution for other taxes, 10t, 22;

      • tax increases, 22;

      • taxpayers as percent of population, 272t;

      • transfer tax on property, 64; VAT vs. sales tax, 19

    • Oldman, Oliver, 312n, 314n, 417

    • Organization for Economic Cooperation and Development (OECD): revenue from VAT, 22, 23t;

      • taxes on goods and services, 22, 23t, 45: excised goods, 46t

    • Orozco de Triaua, Alba Lucia, 299n, 322n, 417

    • Owens, Jeffrey, 2l6n, 417

    • Pakistan: manual vs. computer system, 327

    • Panama: audit, preventive, 296: cash registers, problem of, 283;

      • introduction of VAT: effect on prices, 194t, 211t;

      • name of VAT, 20n;

      • rates, 39, 40t;

      • returns, monthly, 284;

      • revenue, 10t, 26t, 28t;

      • small businesses, 124t;

      • taxpayers as percent of population, 272t

    • Paraguay: evasion of sales tax, 304n;

      • rates of retail sales tax, 18; VAT not adopted, 18

    • Parkinson, Dennis A., 75t(n), 417

    • Peacock, Alan, 417

    • Pearson, Mark, 161n, 417

    • Pechman, Joseph A., 417

    • Penalties, 318–23: automatic: financial, 318–21, 323, nonfinancial, 321–22;

      • criminal prosecution, 322–23;

      • errors in accounting, 315;

      • imposed, in Korea, 307t;

      • installment payments of outstanding tax, 323;

      • invoices, violations concerning, 356;

      • nonregistration, 274;

      • offenses liable to, in Ireland, 319t: publicity of, 323;

      • traders subject to, 361 (see also Control, Enforcement, and Evasion)

    • Perry, Guillermo, 299n, 322n, 417

    • Peru: administration, 249;

      • introduction of VAT: effect on prices, 194t, 211t;

      • name of VAT, 20n: payments, 284;

      • rates, 40t, 41: reduction in, 24, 227;

      • revenue, 10t, 26t, 28t;

      • small businesses, 121, 124l;

      • substitution for other taxes, 10t;

      • tax for small traders determined by tax administration, 121;

      • taxpayers as percent of population, 271, 272t; VAT extended for retailers, 110;

      • wholesale stage, VAT applied through, 6, 7t

    • Philippines: agriculture, 148t;

      • exemptions, 52t;

      • payments, 284;

      • penalty of closing down business, 322;

      • rates, 40t, 148t;

      • substitution for other taxes, 10t

    • Pink, Geoffrey C., 92n, 417

    • Poddar, Satya, 96n, 166n, 417

    • Pohmer, Dieter, 102n, 417

    • Poland: consideration of VAT, 39, 40t;

      • substitution for other taxes, 10t, 25

    • Porras, Fernando A., 283n, 285n, 417

    • Portugal: administration, 235, 239t, 250t, 402;

      • agriculture, 148t;

      • computerization problems, 329;

      • exemptions, 52t, 98;

      • financial transactions, stamp tax on, 98;

      • forfait system for small traders rejected, 120;

      • goods and services tax, 23t;

      • introduction of VAT, 20n: effect on prices, 194t, 200, price change estimates, 198–99;

      • rates, 40t, 164: reduced, 48;

      • ratio of VAT staff to taxpayers, 250t;

      • refund of tax on stocks, calculation of, 179;

      • revenue, 161t;

      • small businesses, 124t, 133;

      • substitution for other taxes, 10t;

      • transport tax, 48;

      • zero rating, 52t, 53

    • Prebble, John, 219n, 417

    • Prices, 191–213: changes at introduction of VAT, 185–86, 194t, 200–13;

      • consumer price index, 211t, 211–13;

      • forecasts of price changes, 192–200;

      • inclusive and exclusive of VAT, 8–9, 357–58;

      • policies, current, 200–13 (see also Economy and Introduction of VAT)

    • Rabushka, Alvin, 219n, 417

    • Racing, 107

    • Rates, 39–48, 40t, 228: agriculture, 147, 148t;

      • changes in, 187;

      • craftsmen’s trade, 105–106;

      • and credit balances, 286–87;

      • effective, 44–45;

      • and excise duties, 45–47, 46t, 159;

      • favoring small business, 118–19;

      • flat rate compensation scheme in European Community, 142–46;

      • geographical and regional variations, 47–48;

      • harmonization, 48: in European Community, 111, 120, 131, 159, 165;

      • at introduction of VAT, 40t;

      • on January 1, 1988, 39–41, 40t;

      • in Korea, by industry, 119t;

      • multiple, 42–44, 114–15, 159, 313;

      • reduced: for Community member states, 159, for farmers, 81;

      • single vs. multiple, 42–44;

      • special: for cultural activities, 75l, for financial services, 94t;

      • standard, 236, 398–99;

      • zero rating, examples of, 52t, 59–68 (see also European Community and specific countries)

    • Rayney, Peter, 65n, 417

    • Razin, Assaf, 229n, 417

    • Registration of taxpayers, 16, 47–48, 132–34, 133c, 270–303, 349–51, 402 (see also Administration, Control, Small traders, and specific countries)

    • Retail stage of VAT, 6–8, 7t, 17–19, 108–40, 349–64: application to retail sales, 6–8;

      • capital purchases, 6;

      • compliance costs, 351–53, 354t;

      • countries not applying VAT through retail stage, 6–8, 7t;

      • economy, effects on, 214–30;

      • invoices, 353–56, 359;

      • numbering, 361;

      • pricing, 357–58;

      • profit margins, 358–59, 358t;

      • rates, multiple, 114–15;

      • reasons for including in VAT, 109–10;

      • receipts, issuance of, 356–57;

      • recordkeeping, 113–15, 359–61;

      • registration of small traders, 132, 349–51;

      • retailers and small traders, 108–40;

      • revenue from retail sales, 10t, 21–24, 23t, 108–109;

      • ring system, 16, 17;

      • sales tax, 17–19;

      • stocks, sale of, 115–16;

      • substitution for other taxes, 9–19, 10t;

      • visits to retailers by officials, 361–64

    • Robinson, Bill, 417

    • Roth, William V., Jr., 32t, 32t(n), 33, 33n, 417

    • Sales taxes, 9–19, 155–71: agricultural products and, 151;

      • alternative tax coordination schemes, 168t;

      • broad-based, 386;

      • Canada: proposals for reform, 170–71;

      • cascade effect, 9–19, 9n, 10t, 16, 151, 163, 178;

      • compliance costs, studies of, 354t;

      • credit mechanism, 16–17;

      • evasion, 304n, 305;

      • harmonization with VAT, 155–71;

      • manufacturers, 7t, 101, 15–17, 167;

      • municipal, 171;

      • retail, 17–19, 164, 228;

      • ring system, 16, 17, 272;

      • single-stage, 15, 178: substitution of VAT for, 9–19, 10t, 220–24, 272;

      • United States: alternative tax coordination schemes, 161–69, 168t;

      • wholesale, 7t, 10t, 15–17, 167 (see also Cascade taxes)

    • Sampson, Anthony A., 198n, 417

    • Sandford, Cedric, 352n, 354t, 354t(n), 417

    • Schenone, Osvaldo, 224n, 417

    • Scholz, John Karl, 221n, 417

    • Secondhand goods, 52t, 61–62, 63t, 102–105: antiques, 102–104;

      • auctioneers, 102–105;

      • cash transactions, 102;

      • dealers in, importance of, 104–105;

      • definition, 103;

      • European Community and, 104: proposed harmonization of, 102–103: government-owned shops for, 104;

      • private transactions, 104;

      • registration desirable, 104;

      • relief to traders, 104

    • Senegal: introduction of VAT: effect on prices, 194t, 211t, first applied to some manufacturers, 398;

      • manufacturing level, VAT applied at, 7t;

      • rates, 39, 40t;

      • standard rate, 398;

      • revenue, 10t, 26t, 28t;

      • substitution for other taxes, 10t

    • Shoup, Carl S., 3, 15n, 159n, 161n, 417

    • Shoven, John B., 44n, 221 n, 417

    • Sinclair, P.J.N., 193, 193n, 222n, 417

    • Small traders and businesses, 108–40: agents, 91–92;

      • cash transactions, 117, 137–38;

      • characteristics, 113–18;

      • compliance costs, 117;

      • control measures for tax administration, 139–40;

      • determination of tax base by tax administration, 121–22;

      • educational program, 139–40; “equalization tax scheme,” 119–20;

      • European Community, small enterprises in, 122–31;

      • exemption from VAT: criteria, 111–13, treatment of, 117, 118, 123, 130, 132–34;

      • forfait system, 120–21;

      • multiple rates: problems with, 114–15, 116, system, 118–19;

      • noncompliance measures, 139–40;

      • rates in Korea, by industry, 119t;

      • recordkeeping, 113–15, 116, 132–34, 135–40: European Community guidelines, 135, 137, provision of account book, 117, 139;

      • registration, 16, 132–34: decision chart, sample, 133c;

      • returns, frequency of, 117, 138–39;

      • self-con-sumption, 118;

      • services, provision of, 116–17, 135;

      • smallest businesses, 118–22, 124t, 132–35;

      • schemes for, 118–22, 137–40;

      • stocks, role of, 115–16;

      • treatment of, in selected countries, 124t (see also Trader’s point of view)

    • Smith, Stephen, 161n, 316n, 417

    • Somerville, Ian, 362n, 363n, 417

    • South Africa: cascading, avoidance of, 16;

      • comprehensive business tax really a VAT, 25–30;

      • consideration of VAT, 18, 39;

      • introduction of VAT, proposed, 40t;

      • Margo Commission Report, 25, 30;

      • retail sales tax, 18;

      • substitution for other taxes, 10t, 16, 185;

      • transitional refund of tax on capital goods, 185

    • Spain: administration, 239t, 249;

      • agriculture, 148t;

      • computer system, 332;

      • credit balances, 287;

      • “equalization” tax for small traders, 119;

      • exemptions, 52t, 98;

      • financial transactions, stamp taxes on, 98; forfait system for small traders, 131;

      • goods and services tax, 23t;

      • introduction of VAT, 20n: effect on prices, 194t;

      • payment slips, 284;

      • rates, 40t, 67, 249;

      • revenue, 161t;

      • small businesses, 124t;

      • substitution for other taxes, 10t, 22;

      • tax increases, 22;

      • taxpayers, number of unrecorded, 272;

      • transport tax, 67

    • Staffing, 245–69, 246c, 250t, 259t, 260c, 402 (see also Administration)

    • Stephens, Robert J., 207n, 417

    • Stockfisch, J.A., 227n, 417

    • Strachan, Valerie, 417

    • Sweden: administration, 239t, 250t;

      • agriculture, 631, 83;

      • catering, 89;

      • exemptions, 52t, 130;

      • exports, 225;

      • farmers, treatment of, 81, 141;

      • goods and services tax, 23t;

      • government sector before and after VAT, 228t;

      • identification numbers for taxpayers, 277;

      • introduction of VAT: effect on prices, 194t, 207–208, 211t, transitional measures, 184t;

      • policies, 206–207;

      • prices: tax inclusive, 8, 44, VAT and, 194t, 207–208, 211t;

      • rates, 40t, 44, 88, 207–208: effective, 45, on housing sales, 64;

      • ratio of VAT staff to taxpayers, 250t;

      • retail sales tax, 18;

      • revenue, 10t, 26l, 28t;

      • small businesses, 124t, 130;

      • substitution for other taxes, 10t, 23, 207–208, 226;

      • taxpayers as percent of population, 272t: zero rating, 52t

    • Switzerland: goods and services tax, 23t;

      • reliance on direct taxes, 22;

      • rejection of VAT, 18;

      • retail sales tax, 18

    • Tait, Alan A., 21n, 192n, 2llt(n), 212n, 222n, 417

    • Taiwan Province of China: administration, 249: exemptions, 52t;

      • invoices, 280, 355;

      • rates, 40t, 249;

      • substitution for other taxes, 10t;

      • zero rating, 52t

    • Tanzi, Vito, 193n, 417

    • Tax identification numbers (see Control)

    • Thailand: consideration of VAT, 39;

      • introduction of VAT, proposed, 40t;

      • substitution for other taxes, 10t

    • Tielemans, P.P.S.C., 417

    • Topham, Neville, 316n, 417

    • Trader’s point of view. 349–64: advantages to traders, 351–52;

      • anticipation of VAT, 349–51: considerations, 349–51;

      • audit of accounts, 361;

      • bookkeeping requirements, 359–61;

      • capital goods, 6;

      • compliance costs, 351–53: of sales tax, 354t;

      • exemptions, definition of, 49–50;

      • fraud, penalties for, 361;

      • implications of business decisions, 364;

      • invoices as control documents, 353–56: link with bookkeeping, 359, numbering, 361;

      • pricing and VAT content, 357–58;

      • profit margins, 358–59, 358t;

      • receipts for final consumer, 356–57;

      • visits by officials, 361–64: credibility checks, 363–64;

      • zero rating, definition of, 49–50 (see also Control, Exemptions, and Small traders)

    • Transitional problems, 172–87;

      • capital goods, relief for tax on, 182–84;

      • changes in VAT rates, 187;

      • continuous supplies, 185;

      • contract prices before VAT, 185–86;

      • definitions of taxable transactions, 186–87;

      • educational visits by officials, 176–78;

      • exports already taxed, 186;

      • installment payments, 186;

      • publicity, 172–73;

      • registration of taxpayers, 175–76;

      • relief of tax paid on stocks: calculation of, 178, claims for, 179–80, 182;

      • special measures, 184t;

      • stocks, 178–82: of construction industry, 181, of importers, manufacturers, wholesalers, and retailers, 180–81, qualifying, 180 (see also Introduction of VAT)

    • Transport, public, 59, 66–67, 395–96

    • Trasker, Peter G.B., 225n, 226n, 417 (see Brecher)

    • Tunisia: bank loans and fees, proposed tax on, 95;

      • consideration of VAT, 39;

      • introduction of VAT, 40t;

      • rates, 40t, 95: effective, 45

    • Ture, Norman B., 193n, 417

    • Turkey: administration, 239t, 249;

      • agriculture, 148t;

      • credit against income tax, 305;

      • “equalization” tax for small traders, 119, 120;

      • exemptions, 52t;

      • goods and services tax, 23t;

      • introduction of VAT: effect on prices, 194t: invoices: required for final consumer, 356, scheme for, 283–84;

      • rates, 40t, 249;

      • revenue, 10t, 26t, 28t;

      • small businesses, 134n;

      • substitution for other taxes, 10t;

      • tax increases, 22

    • Turnier, William J., 175n, 417

    • United Kingdom: administration, 235, 239t, 244c, 250t, 258: costs of, 266t, 268–69, use of customs and excise department, 401;

      • agriculture: treatment of, 147, under VAT, 148t;

      • assessment by authorities, 316;

      • audit: of computerized businesses, 339, frequency of, 296, 297t;

      • Black Box arrangement, 92;

      • buildings, 63t, 65, 83, 86;

      • historical, 75;

      • charities, 71, 79;

      • children’s clothing, 70;

      • compliance costs, 117, 351, 352, 352n, 353, 354t;

      • computer system, 328;

      • control, visits by, 297t;

      • craftsmen’s trade, rates on, 105;

      • cultural activities, 73–75, 75t: art, 74, 102–103, 104, books, 52t, 73–74, 75t;

      • enforcement: percent of offenses, 315, revenue from, 316;

      • European Community’s case against United Kingdom, 55, 65–66, 86;

      • evasion: estimates of, 304, public attitudes toward, 305;

      • exemptions, 50, 52t, 72, 130;

      • exports, 225;

      • farmers: accounting by, 141n, treatment of, 81, 141, 147;

      • free zones, six, 396;

      • goods and services tax, 23t: excised goods, 46t, imported goods, 226, postponed accounting systems abolished, 184, transport of goods, 66;

      • government sector before and after VAT, 228t;

      • introduction of VAT, 20: effect on prices, 194t, 208–10, 211t, price and wage controls, 199, price change estimates, 198–99, transitional measures, 184t;

      • Keith Committee, 317–18, 320, 321, 321n;

      • partnerships, 366–367;

      • penalties: criminal prosecutions, 322, 323, interest, 319–20, trader default surcharges, 320;

      • policies, 200–10, 220;

      • prices, 194t, 198–99, 208–10, 211t;

      • progressivity, 216, 220;

      • promotional schemes, 385;

      • rates, 40t, 41, 105, 164, 198, 208–10: effective, 44;

      • ratio of VAT staff to taxpayers, 250t, 258, 402;

      • recordkeeping, 317: refunds of tax on stocks, 178;

      • register of taxpayers, 278–79;

      • retailers: compliance with, 117, schemes for, 113–14, 131;

      • revenue, 10t, 26t, 28t, 117, 161t;

      • sales tax, single-stage, 15;

      • self-supply of stationery, 372;

      • secondhand works of art and antiques, 102–103, 104: small businesses, 113–14, 117, 122, 124t, 128, 130;

      • staff, 250t, 258, 266t;

      • substitution for other taxes, 10t, 21, 22, 208–10, 226;

      • taxpayers as percent of population, 271, 272t;

      • warrant for entry and search, 318;

      • zero rating, extensive use of, 52t, 53, 54, 75t, 92, 114, 215, 400;

      • of books, 52t, 75t, of buildings, 52t, 63t, 87, 216, of children’s clothing, 70, 216, of food, 52t, 59, 216, 398, of freight and passenger transport, 67, 395

    • United States: alternative tax coordination schemes, 161–69, 168t, 221;

      • audit by computer, 339: business transfer tax, proposed, 33: effect of, 33;

      • computer system, cost effectiveness of, 327;

      • consideration of VAT, 31–34, 32t, 39, 400: options for, 161–69, 168t;

      • debate about role of VAT, 21, 21n, 31–34, 32t, 36, 218;

      • economy, effect of proposed VAT on, 216, 221: excised goods, 46t;

      • federal-state tax issues, 161–67, 218: opposition to VAT, 34, 169;

      • ratio of VAT staff to taxpayers, estimated, 250, 250t, 402;

      • revenue, VAT as source of, 33–34, 34n;

      • sales taxes, 18–19, 31–34: audits for, 296, combined with VAT, 161–69, compliance costs, 354t, credits for, 218;

      • staff required in proposed VAT, 259t: compared with example, 258–59, 259t;

      • substitution for other taxes, proposals for, 31–34, 161–62, 221, 222, 225;

      • U.S. Internal Revenue Service as administrator of a VAT, 169, 250

    • Uruguay: agriculture, 148t;

      • credit balances, 287;

      • exemptions: financial services, 98, passenger transport, 67;

      • farmers, treatment of, 152;

      • financial institutions, taxing of, 98–99;

      • introduction of VAT: effect on prices, 194t;

      • name of VAT, 20n;

      • rates, 103, 148t;

      • returns, monthly, 284;

      • revenue, 10t, 26t, 28t;

      • secondhand sales, 103;

      • substitution for other taxes, 10t

    • Utilities, 54, 58, 68, 185

    • Value-added tax (VAT): accounting for, 137–40;

      • accounts methods, 4;

      • additive method, 4;

      • administration, 233–69, 304–23, 324–48;

      • agent’s commission, 91–92;

      • agriculture, treatment of, 141–54;

      • alternative tax coordination schemes, 168t;

      • businesses, small: options for VAT, 118–35, treatment of, 124t, 132–35, 137–39;

      • capital purchases, 6;

      • codes, 135–37;

      • computerization, 324–48;

      • cross-checking, 110;

      • date introduced or proposed, 40t;

      • definition: 4, 284–85, 289, of liability to pay, 365–96;

      • destination principle, 20, 223;

      • difficult-to-tax goods and services, 80–107;

      • economy, effects on, 214–30;

      • efficiency of, 220–21;

      • exemptions, 49–68: of “merit” goods, 69–79, of small businesses, 111–13, 117, 118, 123, 130: economic aspects and consequences, 400–401;

      • enforcement, 315–19;

      • evasion, 304–23;

      • federal systems, 155–71;

      • financial sector, 92–97, 94t;

      • forfait system for small businesses, 120–21;

      • hard-to-tax groups, sample of, in Argentina, 275, 276t: history and growth, 3, 20, 25, 30–38;

      • introduction of VAT: problems with, 172–87, 184t, schedule for, 409–16;

      • invoice method, 4, 4–6;

      • leasing: of goods, 90–91, of immovable property, 84t, 87–90;

      • liability for VAT, definitions of, 365–96;

      • methods of VAT calculation, 4–6, 166–67;

      • options for VAT tax schemes, 168t;

      • origin principle, 20, 158–59;

      • penalties, 318–23;

      • percentage of GDP, 28t;

      • percentage of total tax, 26t: prices: effect of introduction of VAT on, 191–213, 194t, 211t, inclusive or exclusive of VAT, 8–9;

      • racing, taxable under VAT, 107;

      • rates, 39–48: at introduction of VAT, 40t, on January 1, 1988, 39–41, 40t;

      • reasons for adopting VAT, 9–19, 32t, for not adopting, 30–38;

      • regional groupings, needs of, 19–21, 23t;

      • retailers, 108–40: schemes for, 137–to;

      • retail stage, 6–8, 7t, 17–19, 108–40: return, sample, 407–408: revenue source, 10t, 21–24, 26t, 28t, 108–109;

      • sales tax: harmonization with, 155–71, replacement for, 9–20, 10t, 18–19, 108, 178, 221, 223–24;

      • saving and investment, effect on, 221–22: schedule for introduction of VAT, 409–16;

      • secondhand goods, dealers in, 61–62, 102–105;

      • small traders and businesses, 108–40;

      • staffing, 245–67. 402;

      • structure, 397–400;

      • substitution for other taxes, 9–24, 10t, 192, 220–26;

      • taxation: of “merit”

      • goods, 69–79, of services, 58–59, 94t;

      • traders and VAT, 349–64;

      • transitional problems and measures, 172–87, 184t;

      • types, 8–9;

      • uses, 229–30;

      • utilities, taxation of, 56, 68; VAT taxpayers as percent of population, 272t;

      • zero rating, 52t, 53–68, 69–79 (see also specific countries)

    • Walker, Charls E., 32t, 32t(n), 33, 33n, 417

    • Walters, Alan, 198, 198n, 213n, 229n, 417

    • Waugh, Auberon, 318n, 417

    • Western Hemisphere: agriculture, 148t: small businesses, 124t (see also Latin America)

    • Whalley, John, 44n, 96n, 221n, 417

    • Wheatcroft, G.S.A., 369n, 417

    • White, Brenda, 74n, 417

    • Williams, David W., 187n, 388n, 417

    • Woods, La Verne, 312n, 314n, 417

    • Yocum, James C., 354t, 354t(n), 417

    • Zero rating, 49–68, 52t, 69–79, 80–107: agricultural inputs, 152, 153;

      • Black Box arrangement, 92;

      • commodity trade, 92;

      • definition, 49;

      • European Community and, 50–56;

      • examples, 49–68, 52t;

      • financial services, 94t;

      • food, 59–61;

      • housing, 55, 61–66;

      • justifications for, 56;

      • “merit” goods, 69–79: charities, 78–79, children’s clothing, 70, cultural activities, 73–75, 751, government purchases and sales, 75–78, medical and veterinary services, 71–73;

      • penalties in Korea for errors in, 307t;

      • “reverse charge” services, 100–101;

      • services performed abroad, 100–101;

      • zero-rated goods, inputs for, 56 (see also Exemptions)

    • Zimbabwe: retail sates tax, 18

    Alan A. Tait is Deputy Director of the Fiscal Affairs Department of the Fund. He has published widely on tax policy and worked on the possibilities and problems of value-added taxes in over a dozen countries in Europe, the Americas, and Asia. Fifty-five countries now use the VAT and at least eight are considering introducing it. It has become the fashionable sales tax of the last quarter of this century. Yet it is not appropriate for every country nor need countries adopting it take an “off the shelf” package. The tax can be tailored in many different ways and this book explores these options and indicates some preferred solutions. The emphasis is not on any one country; rather examples are taken from many different parts of the world suggesting that we can all learn from each other (both what to do and what not to do). The balance between the discussion of problems, analysis of effects, and examination of administration is intended to emphasize the combination of theory and practice needed to evaluate this interesting tax.

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