Progressive Taxation versus Progressive Targeted Transfers in the Design of a Sustainable Value Added Tax System
Bibliographic record
Abstract
Value added tax (VAT) has proven to be the most stable and revenue productive of all components of the tax system. However, for such a tax system to be policy sustainable over time, taxpayers must consider it fair, and it must be viewed by the National Treasury to be productive in terms of raising substantial revenue and administratively feasible by the VAT-implementing agency. The VAT system in Belize has been a highly productive component of the revenue system, and it was designed to be progressive, but in arriving at this position, over 40% of the personnel of VAT tax administration are engaged in processing tax refunds to promote progressivity and to fight against the fraud that such a refund system incubates. This is an unsustainable position for any tax system to remain intact over time. This paper evaluates the attempt by the government of Belize to introduce progressivity into their single-rate VAT through zero rating and exemption from taxation of many goods and services that are major expenditure items of poor households. The distributional impacts are measured by a tax reform that eliminates all zero ratings except for exports and a few exemptions. By eliminating zero-rated items and significantly reducing the number of exempt items, the impact of the reform adds a regressive element, although overall, the VAT system remains progressive. However, 75% of the revenues raised by this reform would be paid by the top 40% of the income distribution. The increased revenues could finance an expansion of an existing transfer scheme that exclusively targets poor households. In addition, reforms would eliminate at least 40% of the personnel costs of administering the current VAT system.
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How this classification was reachedexpand
Full frame machine prediction
Teacher imitationNot calibrated prevalence, not ground truth. Human validation pending. The Gemma side is a direct model label for every work in the frame, read from the title-only record. The Codex side is a classifier learned from the 10,348 direct Codex labels and calibrated to design-weighted sample rates; fields without enough sample support carry no Codex call. Candidate is the union of the two sides; consensus is their intersection. These outputs are machine_predicted_unvalidated and are not human labels.
Distilled classifier scores by category (both heads)
| Category | Codex | Gemma |
|---|---|---|
| Metaresearch | 0.003 | 0.003 |
| Meta-epidemiology (narrow) | 0.000 | 0.000 |
| Meta-epidemiology (broad) | 0.000 | 0.001 |
| Bibliometrics | 0.001 | 0.001 |
| Science and technology studies | 0.001 | 0.002 |
| Scholarly communication | 0.003 | 0.003 |
| Open science | 0.001 | 0.003 |
| Research integrity | 0.001 | 0.001 |
| Insufficient payload (model declined to judge) | 0.004 | 0.001 |
Machine scores (provisional)
The two teacher heads of the student model, read on this work. A score orders the frame for review; it never asserts a category, and the validation status ships verbatim with every row.
Baseline scores from an immature model (maturity gate not passed, 7 training rounds). Scores rank; they never assert a category.
score_only:v0-immature-baseline · verbatim from the scoring run: score_only means the number may rank works, and no category label ships from itClassification
machine, unvalidatedMachine predicted; a candidate call from one source (direct Gemma or distilled Codex), not a consensus.
How this classification was reached, model by model and score by score, is at the end of the page under "How this classification was reached".