Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/129611
Authors: 
Asatryan, Zareh
Bittschi, Benjamin
Doerrenberg, Philipp
Year of Publication: 
2016
Series/Report no.: 
ZEW Discussion Papers 16-022
Abstract: 
We study the effect of inflowing remittances - a major source of capital for many countries - on tax-revenues and tax-policy. Instrumenting remittances with changes in the oil-price interacted with a country's distance to oil-producing countries, we find that remittances have a large positive effect on VAT revenues but no effect on income-tax revenues. This suggests that remittances often escape the income tax but can be taxed via consumption. We further show that tax policy is responsive to shocks in incoming remittances: remittances make the adoption of VAT-systems more likely, and they lead to lower VAT-rates and higher income-tax rates.
Subjects: 
Remittances
Tax revenue
Tax policy
Value added tax
Personal income tax
Migration
Development
JEL: 
F24
H20
O23
Document Type: 
Working Paper

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