Tax Incidence: A Case Study of Value-Added Tax in Iran

Document Type : Research Paper

Authors

1 Assistant Professor of Economics, Sharif University of Technology

2 M.Sc. Economics, Sharif University of Technology

Abstract

Tax incidence is a key question in empirical public finance and tax policy design. Using monthly price data from April 2005 to March 2014 in Iran, we classify 43 commodities to exempt and taxable groups. By comparing monthly price changes for the two categories over the periods with tax rate changes, we employ a difference-in-differences strategy to estimate VAT incidence. Consumer share of VAT is estimated to be 63 percent. However, this point estimate should be interpreted with caution because the 95 percent confidence interval is large and contains both full and less than complete pass through. No pass through is rejected at 5 percent significance level. Lack of precision in estimates could be a result of small tax increases and high inflation rates during this period.
JEL Classification: H22, H31, H32

Keywords

Main Subjects


ارشدی، علی، نجفی‌زاده، سید‌عباس و مهدوی، مهران (۱۳۹۰). تأثیر مالیات برارزش افزوده بر قیمت‌ها در ایران. فصلنامه‌ی پژوهش‌ها و سیاست‌های اقتصادی، سال نوزدهم، شماره‌ی ۵۸، ۷۲۷-۷۵۸.
اسدزاده، احمد، تسلیمی بابلی، امین و جلیلی، بتول (۱۳۹۳). بررسی اثرات تورمی و توزیعی مالیات بر ارزش افزوده بر بخش‌های مختلف اقتصاد ایران. پژوهشنامه‌‌ی مالیات، شماره‌ی بیست‌و‌چهارم (مسلسل ۷۲).
سازمان امور مالیاتی کشور، قانون مالیات بر ارزش افزوده، (۱۳۸۷).
فریدزاد، علی، پروین، سهیلا و بانویی، علی‌اصغر (۱۳۹۰). اثر قیمتی مالیات بر ارزش افزوده با استفاده از تکنیک داده - ستانده (مورد ایران). فصلنامه‌ی پژوهش،های اقتصادی، سال شانزدهم، شماره‌ی ۴۷، ۱۰۵-۱۲۷.
مرکز آمارهای اقتصادی بانک مرکزی )۱۳۹۴(. معاونت آمارهای اقتصادی، بخش شاخص قیمت‌ مصرف‌کننده، داده‌های سری زمانی شاخص قیمت.
Anderson, S. P., de Palma, A., & Kreider, B. (2001). “Tax Incidence in Differentiated Product Oligopoly.” Journal of Public Economics 81, 173–192.
Besley, T. J. (1989). “Commodity Taxation and Imperfect Competition: A Note on the Effects of Entry. ” Journal of Public Economics 40, 359–67.
Besley, T. J., & Rosen, H. S. (1999). “Sales Taxes and Prices: An Empirical Analysis.” National Tax Journal 52, 157–178.
Carbonnier, C., (2007). “Who Pays Sales Taxes? Evidence from French VAT Reforms, 1987–1999.” Journal of Public Economics 91, 1219–1229.
Delipalla, S., & Keen, M. (1992). “The Comparison between Ad Valorem and Specific Taxation under Imperfect Competition.” Journal of Public Economics 49, 351–68.
Delipalla, S., & O'Donnel, O.  (2001). “Estimating Tax Incidence, Market Power and Market Conduct: The European Cigarette Industry.” International Journal of Industrial Organization 19, 885–908.
Doyle, J. J., & Samphantharak, K. (2008). “$2. 00 Gas! Studying the Effects of a Gas Tax Moratorium.” Journal of Public Economics 92 (2008) 869–884.                                         
Fullerton, D., & Metcalf, G. E. (2002). “Tax Incidence.” In: Auerbach, A., Feldstein, M. (Eds.), Chapter 26 in Handbook of Public Economics, vol. 4. Elsevier, Amsterdam, 1788–1872.
Kenkel, D. S., (2005). “Are Alcohol Tax Hikes Fully Passed Through to Prices? Evidence from Alaska. ” American Economic Review 95, 273–277.
Kosonen, T. (2013).  "More Haircut after VAT Cut?  On the Efficiency of Service Sector Consumption Taxes." Government Institute for Economic Research Working Papers 49.
Stern, N. (1987). “The Effects of Taxation, Price Control and Government Contracts in Oligopoly and Monopolistic Competition.” Journal of Public Economics 32, 133–158.
Taubman, P. (1965). “The Effect of Ad Valorem and Specific Taxes on Prices.” Quarterly Journal of Economics 79, 649–656.