The VAT Laffer curve and the business cycle in the EU27: an empirical approach

Oliveira, Francisca Guedes de; Costa, Leonardo

Publication

The VAT Laffer curve and the business cycle in the EU27: an empirical approach

2015Journal article

dc.contributor.author	Oliveira, Francisca Guedes de
dc.contributor.author	Costa, Leonardo
dc.date.accessioned	2016-12-21T11:42:21Z
dc.date.available	2017-10-01T00:30:27Z
dc.date.issued	2015
dc.description.abstract	Value Added Tax (VAT) standard rate Laffer curves are estimated for the European Union of twenty seven countries (EU27) over the period 1995-2011, using a twice continuously differentiable VAT revenue quadratic flexible functional form. A business cycle effect on the Laffer curve is found. In recession years, VAT revenue is typically lower, the curve steeper, and the VAT standard rate that maximises VAT revenue slightly smaller than previously. These results can be explained with reference to changes in the composition of consumption and VAT collection enforcement. A countercyclical VAT standard rate policy (procyclical fiscal policy), observable in a few countries, not only increases the underlying business cycle volatility but may also result in long-term instability of VAT revenue. In 2011, the maximum VAT standard rates in expansion and recession were respectively 22.0 and 21.5 per cent. Most of the EU27 countries were operating in the non-prohibitive range of the curve; although Portugal, with a VAT standard rate of 23 per cent, along with several other countries with similar rates, was already operating in the prohibitive range of the curve. VAT standard rate Laffer curves shifted to the left and maximum VAT standard rates declined during the analysed period.	pt_PT
dc.description.version	info:eu-repo/semantics/acceptedVersion	pt_PT
dc.identifier.citation	Guedes de Oliveira, Francisca; COSTA, Leonardo - The VAT Laffer Curve and the Business Cycle in the EU27: An Empirical Approach. Economic Issues. ISSN 0021-3624. Vol. 20, Part 2 (2015), p. 29-44	pt_PT
dc.identifier.eissn	1363-7029
dc.identifier.uri	http://hdl.handle.net/10400.14/21119
dc.language.iso	eng	pt_PT
dc.peerreviewed	yes	pt_PT
dc.publisher	Economic Issues Education Trust
dc.rights.uri	http://creativecommons.org/licenses/by/4.0/	pt_PT
dc.title	The VAT Laffer curve and the business cycle in the EU27: an empirical approach	pt_PT
dc.type	journal article
dspace.entity.type	Publication
oaire.citation.endPage	44
oaire.citation.issue	2
oaire.citation.startPage	29
oaire.citation.title	Economic Issues
oaire.citation.volume	20
person.familyName	Guedes de Oliveira
person.familyName	Costa
person.givenName	Francisca
person.givenName	Leonardo
person.identifier	AAL-3816-2021
person.identifier.ciencia-id	4012-5FCD-867F
person.identifier.orcid	0000-0002-8626-6701
person.identifier.orcid	0000-0001-8992-2519
person.identifier.scopus-author-id	57191908088
person.identifier.scopus-author-id	18433384700
rcaap.rights	openAccess	pt_PT
rcaap.type	article	pt_PT
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