<Para ID="Par1">With the new European fiscal compact, fiscal rules requiring balanced budgets net of the annual cyclical component have been introduced to limit growth in the ratio of debt to GDP. The objection may arise that such rules would have an adverse effect, especially in the long run on employment and...</para>

Value added tax (VAT) and retail sales tax (RST) are economically equivalent tax alternatives on consumption expenditure. This paper shows that, if indirect taxation is joined to direct taxation, with unethical agents, the equivalence in terms of government's revenues does not hold. We consider...