Incidence of value-added tax in Indonesia: A general equilibrium analysis

This study utilizes a computable general equilibrium (CGE) model designed for an open economy to analyze the incidence of a consumption-type value-added tax (VAT) in Indonesia. Tax incidence is broadly defined to include the impact of the VAT on relative commodity prices, demand and supply of products, investment and saving, government revenues and the balance of payment. Using the 1980 Indonesian economic data as a benchmark equilibrium, the effects of the VAT are investigated within a differential incidence framework by substituting existing taxes in the system by the VAT. It is found that compared to the pre-VAT tax system, the VAT improves the allocation of resources indicated by the positive welfare gain measured in the Hicksian compensating variation. The VAT is also found to be slightly regressive with respect to household income and the distribution of the welfare gain. Yet it becomes less regressive after tax exemptions on some necessities are considered.

Name thesis:degree_name

Ph.D.

Level thesis:degree_level

Dissertation

Discipline thesis:degree_discipline

Economics

Grantor

University of Illinois at Urbana-Champaign

Year dc:date

2011

Author dc:creator

• Kusumanto, Bambang

Contributors dc:contributor

• Leuthold, Jane H.

• Economics, General
• Economics, Finance

Statement dc:rights

• Copyright 1989 Kusumanto, Bambang

Language dc:language

eng

Identifier

AAI8924870
(UMI)AAI8924870

OAI identifier oai:identifier

oai:www.ideals.illinois.edu:2142/20591