Abstract
The principal aim of this research is the design of a tax reform of the Value Added Tax in Spain, under justness approaches, taking into account the efficiency approaches. I want to identify the desirable changes (guidelines) in the regulation of the VAT that have a positive differential effect regarding: 1) inequality, 2) poverty and 3) social well-being. This work pretends to answer to certain questions:a) Is it possible to design a VAT tax reform that reduces their unfavorable redistributional effects?
b. Is it possible to design VAT tax reform that minimize the negative effects on the poverty without deadweight lost ?
c. Is it possible to increase the social well-being, with the same revenue?
There are other additional questions derived of these general objectives. Would it be advisable to increase the distance between the reduced rate and the general rate of the VAT in Spain? Is it idea to reduce the inferior limits of the reduced rate? Should the general rate increase? Is it socially efficient to follow the guidelines of the European Union regarding the Indirect tax harmonization? Should some basic necessities be exempt of VAT, such as the foods or medicines? Several fiscal structures will be postulated, and their potential effects will be simulated according to redistribution, poverty and social well-being.
The strategy to satisfy these general and partial objectives is the following one. Fist of all, it must evaluate the initial situation. Second, I pretend to estimate the effects of a marginal tax reform of the VAT in Spain on the mentioned objectives. Third, I propose a general VAT tax reform in Spain that contributes positively to the objectives of redistribution, poverty and social well-being. Also, I postulate others alternatives tax scenarios of the VAT in Spain to question the different partial objectives. Last, it is carried out the simulation of the different proposals of VAT tax reform in Spain, and the consequent evaluation of how rich the basic objectives of the thesis.
To achieve these objectives, I need some methodological contributions. First, I want to identify the distributional consequences with a level of decomposition that is politically outstanding. Also, I propose a perfect decomposition of the impact on the vertical equity of the VAT. And I try to calculate the rupture of the neutrality horizontal of this indirect tax.
Second, I develop methodological improvements that allow to measure the impact on the poverty when there are changes of the VAT rate structure. The public literature has forgotten this approach to evaluate possible VAT reform. I use a new methodological instrument to measure the impact of indirect tax reform on the poverty: Poverty Concentration Curve.
Third, this work worries about designing the tax reforms that improve the social well-being, avoiding the any particular selection of the function of social well-being (without any assumption about the normative value previously). The Normalized consumption Dominance Curve is used to allow to identify how changes the social well-being when a marginal tax reformation of the VAT rates.
| Date of Award | 10 Sept 2003 |
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| Original language | Spanish |
| Supervisor | Magdalena Mercader Prats (Director) |