The value-added tax (VAT) form of the sales tax is preferred in many developing countries because: 1) a large share of VAT revenue is collected prior to the retail level. 2) the VAT can be levied at a higher rate. 3) firms have no way to suppress information on their purchases and sales. 4) there is no need to conduct periodic audits to ensure compliance.
The value-added tax (VAT) form of the sales tax is preferred in many developing countries because: 1) a large share of VAT revenue is collected prior to the retail level. 2) the VAT can be levied at a higher rate. 3) firms have no way to suppress information on their purchases and sales. 4) there is no need to conduct periodic audits to ensure compliance.
Chapter4: The Aggregate Economy
Section: Chapter Questions
Problem 9E
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Transcribed Image Text:The value-added tax (VAT) form of the sales tax is preferred in many developing countries
because:
1) a large share of VAT revenue is collected prior to the retail level.
2) the VAT can be levied at a higher rate.
3) firms have no way to suppress information on their purchases and sales.
4) there is no need to conduct periodic audits to ensure compliance.
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