European Parliament Library

Targeting, Cascading, and Indirect Tax Design, Michael Keen

This paper addresses two fundamental issues in indirect tax design. It first revisits the case for reduced rates on items especially important to the poor, establishing conditions under which even very crudely targeted spending measures better serve their interests. It then explores the welfare costs from cascading taxes, showing that these may actually be lower the wider the set of inputs that are taxed but, more to the point—and contrary to the common notion that “a low rate on a broad base” is always good tax policy—may plausibly be large even at a low nominal tax rate and with few stages of production
Table Of Contents
Cover; Contents; I. Introduction; II. When are the Poor Best Served by a Reduced Rate?; Tables; 1. VATs with a Single Rate at Time of Introduction; Figures; 1. Distributional Impact of Zero-rating in Mexico; 2. Removing Zero-rating in the U.K., With and Without Compensation; 3. India: Distribution of Benefits of Curative Health Care; III. The Anatomy of Cascading; 4. The Deadweight Loss from Input Taxation; 2. The Deadweight Loss from Input Taxation-Illustrative Calculations; 3. Effective Tax Rates with Cascading-Illustrative Calculations
Literary Form
non fiction
Description based upon print version of record
Physical Description
1 online resource (30 p.)
Specific Material Designation
Form Of Item

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