Abstract
Ten Central and Eastern European countries have applied for membership of the European Union (EU). The adoption of the value-added tax (VAT) is a nonnegotiable condition. Accordingly, all these countries have introduced the VAT which, in principle, is a highly product-neutral, factor-neutral and revenue-productive tax. A review of the structures of the various VATs indicates that more can be done to tax public sector bodies and cultural services. In some countries, immovable property and the agricultural sector can be treated more even-handedly. However, the most important structural weakness of the VATs is the exemption and lower taxation of so-called essential products. VATs are ill-suited to enhance progressivity in tax burden distribution. It is concluded that policymakers should now focus their attention on improving the administration of their VATs. As in many other countries, tax policy often is tax administration.
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Cnossen, S. VATs in CEE Countries: A Survey and Analysis. De Economist 146, 227–255 (1998). https://doi.org/10.1023/A:1003291011259
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DOI: https://doi.org/10.1023/A:1003291011259