VAT Incidence in Real VAT Systems, Accepted at Journal of Public Economics.
(with Giacomo Brusco)
Misallocation or Misreporting: Evidence from a Value Added Tax in India
Limits to VAT Self-Enforcement, with Bhanu Gupta
The Value-Added Tax (VAT) has become a powerful tool for raising tax revenue in contexts with low state capacity. Many countries rely on technology and automation to further strengthen self-enforcement and reduce the burden on tax officers. In this paper we show that such increased reliance on self-enforcement can perversely reduce compliance. Strategic complementarity increases non-compliance among firms that remain connected to non-compliant suppliers. We experimentally increase perceived enforcement of tax filing among Goods and Services Tax (GST) taxpayers in New Delhi, India, which increases compliance by 10 percent on average. However, only taxpayers with above median levels of compliance in their supplier network respond to enforcement at all. Buyers in networks with more non-compliant suppliers are also less likely to shift away from these suppliers.
Wait No More: VAT Refunds and Investment in South Africa, with Giacomo Brusco and Marlies Piek
Refunds are an essential feature of well-functioning VAT systems and take up a sizeable portion of government spending. In South Africa, refunds amount to 50 percent of gross VAT collection, representing a substantial transfer from the government to taxpayers that has to occur at relatively high frequency, often monthly. We show that delays in these refund payments reduce domestic investment, especially by small firms. We use administrative data to provide extensive evidence that firms respond to incentives created by delays and denials of refunds. We exploit a change in the attitude towards refunds of the South African Revenue Service (SARS) to quantify these effects. We find that approximately halving the audit rates of refund-claiming returns and speeding up their processing increased investment by 31 percent and output by 24 percent.
Decentralization and Development, with Traviss Cassidy
Cassidy, Traviss, and Tejaswi Velayudhan (2024), "Government Fragmentation and Economic Growth", Review of Economics and Statistics, Link
Kacamak, Yeliz, Tejaswi Velayudhan, and Eleanor Wilking (2023), "Retailer Remittance Matters: Evidence from Voluntary Collection Agreements", National Tax Journal, 76 (2). Link.
Slemrod, Joel and Tejaswi Velayudhan (2022), "VAT at 100: A Retrospective Survey and Agenda for Future Research", Public Finance Review. SSRN version.
Slemrod, Joel and Tejaswi Velayudhan (2018), "Do Firms Remit At Least 85 % of Tax Everywhere?: New Evidence from India", Journal of Tax Administration, Vol. 4 No. 1. SSRN version, Published version.