1 March 2019
A next meeting within the Lunch Seminar series will take place on Wednesday, March 20 at 1.15 pm in room A103. This time, dr Karolina Goraus-Tańska will present her work “Diverse welfare provisions and migrant self-selection” (the abstract below).
Everyone is welcome – Faculty members, PhD students, MA and BA students, as well as guests from outside of our Faculty, so please spread the word. A light (sandwich) lunch will be provided.
The full schedule of the seminar series in this term is available here.
If you would like to present in the seminar, please contact Ewa Zawojska via e-mail ().
Abstract: As in high-income countries, reduced rates of VAT and VAT exemptions (“preferential VAT rates”) are a common feature of indirect tax systems in low- and middle-income countries (LMICs). Many of the goods and services that are granted preferential rates – such as foodstuffs and kerosene – seem likely to receive such treatment on the grounds that they provide a means for the government to indirectly target poorer households, for whom such expenditures may take up a large proportion of their total budget. We use microsimulation methods to estimate the impact of preferential VAT rates in six LMIC countries, considering their effect on revenues, poverty, inequality, and across the consumption distribution. We consider whether other policy tools might be better suited for the pursuit of distributional objectives by estimating the impact of existing cash transfer schemes and a hypothetical scenario where the revenue raised from broadening the VAT base is used to fund a Universal Basic Income (UBI) in each country. We find that although preferential VAT rates reduce poverty, they are not well targeted towards poor households overall. Existing cash transfer schemes are better targeted but would not provide a suitable means of compensation for a broader VAT base given their low coverage and issues related to their targeting mechanisms. Despite being completely untargeted, a UBI funded by the revenue gains from a broader VAT base would create large net gains for poor households and reduce inequality and most measures of extreme poverty in each of the countries studied – even if only 75% of the additional VAT revenue was disbursed as UBI payments.
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