The value-added tax (VAT) in China has the unusual feature that capital goods are included in the VAT base. In addition …, most services are subject to the business tax, which is not creditable against VAT, but which accrues to local governments …

Has the VAT proved, as its proponents claim, an especially effective form of taxation? To address this, this paper … first shows that a tax innovation-such as the introduction of a VAT- reduces the marginal cost of public funds if and only … system of equations describing the probability of VAT adoption and the revenue impact of the VAT. The sign of the revenue …