Front Matter

Front Matter

Alan Tait
Published Date:
June 1988
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© 1988 International Monetary Fund

The quotation on page 304 from “Banana Republics” is reprinted with permission; composed by Steve Goodman/Steve Burgh/Jim Rothermel; © 1976 Big Ears Music (ASCAP)/Red Pajamas Music (ASCAP); administered by Bug.

Charts and cover: IMF Graphics Section

Library of Congress Cataloging-in-Publication Data

Tail, Alan A.

  • Value-added tax.

  • Bibliography: p.

  • Includes index.

  • 1. Value-added tax. I. Title.

HJ5711.T36 1988 336.2’714 88-13135

ISBN 1-55775-012-2

Reprinted with minor revisions, August 1989; February 1991; November 2001

Price: US$29.50


The following symbols have been used in this book:

… or — to indicate that the figure is zero or insignificant or that the data are unavailable or unknown;

– between years or months (e.g., 1987–88 or January–June) to indicate the years or months covered, including the beginning and ending years or months;

/ between years (e.g., 1987/88) to indicate a crop or fiscal (financial) year.

“Billion” means a thousand million.

National currencies have been converted into U.S. dollars at exchange rates prevailing in January 1988.

It should be noted that the term “country” used in this book does not in all cases refer to a territorial entity that is a state as understood by international law and practice. The term also covers some territorial entities that are not states, but for which statistical data are maintained and provided internationally on a separate, independent basis.


Academics are commonly interested in the more theoretical issues of taxation. Administrators must implement legislation and are worried about the nuts and bolts of taxation. Politicians, ideally, try to ensure that academic ideas are married to practicality to best serve the needs of the country and their constituents.

Not often do studies try to meet all three needs. Those that come the nearest are the tax reform studies and government commissions that deal with particular taxes or tax systems. The 1984 U.S. tax reform or the Canadian Tax Reform of 1987 (Lower Rates, Fairer System) are good recent examples. However, these deal with the problems of a particular country and sometimes lack a broader international perspective. In practice, there can be a significant gap between rhetoric (for example, about equity) and application (for example, actual evasion).

This study tries to examine a single tax, looking at problems and options in theory and their different impacts, while keeping an eye firmly on the ball of practical implementation. The interests of both administrators and taxpayers are considered. At the same time, arguments are advanced for and against alternative policies that might inform politicians or administrators considering changes. As the value-added tax is now used in Europe, Latin America, Africa, Asia, and the Pacific, examples have been taken from a wide variety of systems (as the index shows); the problems of administering a VAT in Asia and Europe are similar, and yet they can be very different; but each region can learn from the other, and this study tries to illustrate problems and solutions by international examples. These examples are obviously not exhaustive but illustrate different ways to tackle particular issues.

I would like to think this study could emphasize to university faculty and students how important are the practical details of tax implementation and, yet, I hope it is written in a sufficiently plain way (at least in parts) to be read by anyone with an interest in taxation. It has been suggested that economists should improve their knowledge of “institutional details, … legal processes and reasoning, and political awareness and savvy” (Nelson (1987, p. 86)). I trust this book is a move in the right direction. It cannot attempt to match the highly detailed legal analysis of, say, European Community law on the VAT, nor does it deal with minutiae of each VAT system—although sometimes detailed examples do illuminate particular problems. In many ways, it is a broad brush treatment with special detailing where issues have not been widely discussed before (such as VAT staffing, audit, evasion, enforcement, and penalties). In other chapters (for example, the chapter on computers), technical jargon has been largely sidestepped to highlight options and decisions encountered in many countries.

This book was not written at the behest of the IMF (which is not responsible for the text); however, the Fiscal Affairs Department of the Fund has worked on VATs in many countries and the writings and views of my colleagues, both staff and consultants, are scattered through this study. It may be invidious to mention any staff member by name, but special note should be made of consultants Gordon Cox, Sol Dubroof, Seamus Duignan, and André Vinck, who taught me much about how VAT works (and does not work); also the referees, who by tradition remain anonymous, but whose trenchant comments added greatly to the text. Librarians Judith Crillo, Young-ja Kim, Yvonne Liem, and Anne Salda kept pushing references to me. Esha Ray provided careful and tactful editorial advice and Ella H. Wright prepared the index. Finally, Mary C. Riegel and Carmelita O. Eugenio battled with me and a changeover of word processing systems to produce a manuscript and no one, not even myself, is more relieved to see this book completed.

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