Kickstarting consumption by tweaking value added taxes
Many countries have adopted targeted VAT reductions, but for some that may be too expensive a measure
Economic distress caused by the COVID-19 pandemic prompted governments to think about crisis alleviating policies. In an earlier blog, authors showed that fiscal policy interventions, such as enhanced value-added tax (VAT) refunds, VAT payment deferrals and VAT filing extensions, increase the liquidity of businesses. Another related measure, documented in OECD data, is the reduction of VAT rates. This measure serves as a temporary demand boost, by promoting consumption.
VAT rate reductions and exemptions around the world
Read the full article written by Erica Bosio, Emilia Galiano and Marko Grujicic at blogs.lse.ac.uk
Источник: London School of Economics