Jawad A. Shah
I'm a Research Fellow at Oxford University's Centre for Business Taxation.
My core area of interest is studying public economics, public financial management and development economics with a focus on taxation. I do applied research using large administrative data sets. For my dissertation, I use administrative data of Value Added Tax (VAT) returns to analyze enforcement and evasion in limited state capacity setting. Recent projects include estimating the effect of a computerized risk based evaluation system to curb input tax evasion, measuring evasion through bunching behavior at minimum value addition kink, impact of penalizing firms for sales to informal sector through an extra tax and the effect of randomized VAT audits on tax compliance.
Letter Writers: David Agrawal William Hoyt Carlos Lamarche Ron Zimmer Mazhar Waseem
Email: jawad.shah@sbs.ox.ac.uk; Centre for Business Taxation, Said Business School, University of Oxford Park End Street OX1 1HP
First Dissertation Chapter
Abstract:
The proliferation of value added tax (VAT) in developing countries was based on the premise that the third party information shall deter tax evasion in these limited enforcement capacity regimes. To test this claim, I exploit quasi-experimental variation created by a Pakistani reform that discretely increased state capacity by enabling a software-based system to accept or reject the input tax credit in real time. I use administrative tax data for the universe of VAT returns filed in Pakistan from tax year 2009 to 2016 to estimate the impact of this reform on the firms operating domestically. Using the exporters not subject to the reform as a comparison group, I find that the input tax claims fell by 2.36 million PKR per treated firm, representing a decline in input tax claims to the tune of 86 billion PKR. Firm heterogeneity analysis by business activity and firm structure shows a decline ranging from 30% to 90%. The corporations and partnerships also show significant reduction in input tax claims from 50-70%. Contrary to the conventional wisdom, the large reduction in evasion shows that VAT implementation in low enforcement capacity regimes may not yield the expected revenue efficiency gains.