Tax reforms and network effects
Autor(a) principal: | |
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Data de Publicação: | 2022 |
Outros Autores: | , , |
Tipo de documento: | Artigo |
Idioma: | eng |
Título da fonte: | Repositório Institucional do FGV (FGV Repositório Digital) |
Texto Completo: | https://hdl.handle.net/10438/32766 |
Resumo: | This paper investigates the effects of a tax reform that eliminates tax rate heterogeneity and cumulative taxation using a general equilibrium model calibrated to Brazil that includes multiple sectors with market power. Industries are connected through input-output linkages and changes in tax costs are not confined within industries. The tax reform shocks propagate through the production network, which may amplify or mitigate their results. The revenue-neutral tax reform generates gains of 7.8% of GDP and 1.9% of welfare. Just eliminating VAT rate dispersion leads to a 5.9% increase in GDP. As expected, sectors that were heavily taxed prior to the reform, as well as their suppliers, benefit the most. Yet, due to propagation effects, in 10 sectors direct taxes increased but output and profits did not fall. This is because their costs were reduced as a result of lower taxes on their suppliers and/or increased demand. Moreover, tax distortions were leading to a shorter and inefficient production chain as the reform significantly changed the linkage structure of the economy. |
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Ferreira, Pedro CavalcantiDelalibera, Bruno RicardoGomes, Diego Braz PereiraSoares, Johann Rodrigues de SouzaEscolas::EPGE2022-10-07T18:55:36Z2022-10-07T18:55:36Z2022-10-07ISSN 0104-8910https://hdl.handle.net/10438/32766This paper investigates the effects of a tax reform that eliminates tax rate heterogeneity and cumulative taxation using a general equilibrium model calibrated to Brazil that includes multiple sectors with market power. Industries are connected through input-output linkages and changes in tax costs are not confined within industries. The tax reform shocks propagate through the production network, which may amplify or mitigate their results. The revenue-neutral tax reform generates gains of 7.8% of GDP and 1.9% of welfare. Just eliminating VAT rate dispersion leads to a 5.9% increase in GDP. As expected, sectors that were heavily taxed prior to the reform, as well as their suppliers, benefit the most. Yet, due to propagation effects, in 10 sectors direct taxes increased but output and profits did not fall. This is because their costs were reduced as a result of lower taxes on their suppliers and/or increased demand. Moreover, tax distortions were leading to a shorter and inefficient production chain as the reform significantly changed the linkage structure of the economy.engEscola de Pós-Graduação em Economia da FGVEnsaios Econômicos;830EPGEReformas fiscaisReforma tributáriaReforma tributária - BrasilImpostosIndústrias - Aspectos econômicosTax reforms and network effectsinfo:eu-repo/semantics/publishedVersioninfo:eu-repo/semantics/articlereponame:Repositório Institucional do FGV (FGV Repositório Digital)instname:Fundação Getulio Vargas (FGV)instacron:FGVinfo:eu-repo/semantics/openAccessORIGINALfgv-epge-ensaio-economico-830.pdffgv-epge-ensaio-economico-830.pdfArtigo principalapplication/pdf1913349https://repositorio.fgv.br/bitstreams/c62b37ac-8450-4ec1-bd31-c3c379522dad/download7fdc39bb974a64d3678e03ec42d245e1MD51LICENSElicense.txtlicense.txttext/plain; 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dc.title.por.fl_str_mv |
Tax reforms and network effects |
title |
Tax reforms and network effects |
spellingShingle |
Tax reforms and network effects Ferreira, Pedro Cavalcanti EPGE Reformas fiscais Reforma tributária Reforma tributária - Brasil Impostos Indústrias - Aspectos econômicos |
title_short |
Tax reforms and network effects |
title_full |
Tax reforms and network effects |
title_fullStr |
Tax reforms and network effects |
title_full_unstemmed |
Tax reforms and network effects |
title_sort |
Tax reforms and network effects |
author |
Ferreira, Pedro Cavalcanti |
author_facet |
Ferreira, Pedro Cavalcanti Delalibera, Bruno Ricardo Gomes, Diego Braz Pereira Soares, Johann Rodrigues de Souza |
author_role |
author |
author2 |
Delalibera, Bruno Ricardo Gomes, Diego Braz Pereira Soares, Johann Rodrigues de Souza |
author2_role |
author author author |
dc.contributor.unidadefgv.por.fl_str_mv |
Escolas::EPGE |
dc.contributor.author.fl_str_mv |
Ferreira, Pedro Cavalcanti Delalibera, Bruno Ricardo Gomes, Diego Braz Pereira Soares, Johann Rodrigues de Souza |
dc.subject.por.fl_str_mv |
EPGE Reformas fiscais |
topic |
EPGE Reformas fiscais Reforma tributária Reforma tributária - Brasil Impostos Indústrias - Aspectos econômicos |
dc.subject.bibliodata.por.fl_str_mv |
Reforma tributária Reforma tributária - Brasil Impostos Indústrias - Aspectos econômicos |
description |
This paper investigates the effects of a tax reform that eliminates tax rate heterogeneity and cumulative taxation using a general equilibrium model calibrated to Brazil that includes multiple sectors with market power. Industries are connected through input-output linkages and changes in tax costs are not confined within industries. The tax reform shocks propagate through the production network, which may amplify or mitigate their results. The revenue-neutral tax reform generates gains of 7.8% of GDP and 1.9% of welfare. Just eliminating VAT rate dispersion leads to a 5.9% increase in GDP. As expected, sectors that were heavily taxed prior to the reform, as well as their suppliers, benefit the most. Yet, due to propagation effects, in 10 sectors direct taxes increased but output and profits did not fall. This is because their costs were reduced as a result of lower taxes on their suppliers and/or increased demand. Moreover, tax distortions were leading to a shorter and inefficient production chain as the reform significantly changed the linkage structure of the economy. |
publishDate |
2022 |
dc.date.accessioned.fl_str_mv |
2022-10-07T18:55:36Z |
dc.date.available.fl_str_mv |
2022-10-07T18:55:36Z |
dc.date.issued.fl_str_mv |
2022-10-07 |
dc.type.status.fl_str_mv |
info:eu-repo/semantics/publishedVersion |
dc.type.driver.fl_str_mv |
info:eu-repo/semantics/article |
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article |
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dc.identifier.uri.fl_str_mv |
https://hdl.handle.net/10438/32766 |
dc.identifier.issn.none.fl_str_mv |
ISSN 0104-8910 |
identifier_str_mv |
ISSN 0104-8910 |
url |
https://hdl.handle.net/10438/32766 |
dc.language.iso.fl_str_mv |
eng |
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eng |
dc.relation.ispartofseries.none.fl_str_mv |
Ensaios Econômicos;830 |
dc.rights.driver.fl_str_mv |
info:eu-repo/semantics/openAccess |
eu_rights_str_mv |
openAccess |
dc.publisher.none.fl_str_mv |
Escola de Pós-Graduação em Economia da FGV |
publisher.none.fl_str_mv |
Escola de Pós-Graduação em Economia da FGV |
dc.source.none.fl_str_mv |
reponame:Repositório Institucional do FGV (FGV Repositório Digital) instname:Fundação Getulio Vargas (FGV) instacron:FGV |
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