The effect of card payments on VAT revenue: New evidence from Greece

Hondroyiannis, George; Papaoikonomou, Dimitrios

doi:10.1016/j.econlet.2017.05.009

Cited by 23 publications

(15 citation statements)

References 3 publications

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“…The long-run elasticity with respect to CARDSHAREP, denoted β 2 in (3) is estimated in the region of 0.1, indicating that, in the long-run, VAT revenue increases by 1% for every 10% increase in CARDSHAREP. This is equivalent to 1% higher VAT revenue for a 1 percentage point increase in CARDSHAREP when the latter stands at 10%, as was the case for example in Greece in 2016, which is exactly in line with the countryspecific estimate reported in Hondroyiannis and Papaoikonomou (2017).…”

Section: Cointegrationsupporting

confidence: 83%

“…She reports evidence that cash transactions impede revenue performance, although, card payments are not found to have a significantly positive influence. More recently, Hondroyiannis and Papaoikonomou (2017) studying the VAT performance in Greece, report a positive effect of card payments on VAT compliance, triggered by the imposition of cash restrictions in July 2015 [3].…”

Section: Introductionmentioning

confidence: 99%

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The effect of card payments on VAT revenue in the euro area: evidence from a panel VECM

Hondroyiannis¹,

Papaoikonomou²

2020

JES

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PurposeA growing amount of micro-data analyses has highlighted the importance of information trails, such as generated by card transactions, for improving tax compliance. Yet, time series evidence indicating a positive effect of card payments on VAT revenue performance has been scarce. This paper revisits the question of the effect of card payments on VAT revenue by using annual and quarterly panel data for the 19 euro area member states, covering the period 2000–2016.Design/methodology/approachA panel VECM is employed in order to address endogeneity issues and to account for common stochastic trends, which, is shown to be crucial in revealing the anticipated positive effect of card use on the performance of VAT.FindingsThe analysis confirms that a higher share of card payments in private consumption increases VAT revenue and the efficiency of revenue collection. Higher gains are estimated for countries with above average self-employment.Originality/valueThe contribution of the paper is twofold. First, to our knowledge it provides the first confirmation of the well-established literature on information trails using aggregate macroeconomic time series in a multi-country setting. Second, it has very timely policy implications, as low-hanging fruit are identified in euro-area economies with much to gain from strengthening the credibility of their fiscal performance, such as Greece.

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Section: Cointegrationsupporting

confidence: 83%

Section: Introductionmentioning

confidence: 99%

The effect of card payments on VAT revenue in the euro area: evidence from a panel VECM

Hondroyiannis¹,

Papaoikonomou²

2020

JES

Self Cite

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“…Sometimes the reduction of the grey zone occurs as a side effect of other processes taking place in the economy, as was in the case of Greece during the financial crisis and the accompanying restrictions in cash transactions (Thalassinos et al, 2015). As a result of the estimations for the parameters of the model based on quarterly estimations 2003q4-2016q2, using the Kalman filter it was shown that a 1% growth in the share of payments made by credit cards in individual consumptionowing to the transparency of transaction cash flowsresulted in approximately a 1% higher tax revenue (Hondroyiannis and Papaoikonomou, 2017).…”

Section: Determinants Of Vat Revenuementioning

confidence: 98%

Household Consumption and VAT Revenue in Poland

Kotlińska¹,

Zukowski²,

Marzec³

et al. 2020

ERSJ

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Purpose: Examine dependencies between the size and the structure of directional household expenditure on consumption and the amount of VAT tax revenue for the state budget in Poland, in connection with the explanation of fluctuations of households' VAT contributions per capita. Design/methodology/approach: The study used the following methods: literature review, methods applied in descriptive statistics, linear models of multiple regression, factor analysis using the method of main components, and a single-factor variance analysis (ANOVA). Detailed analyses were conducted based on own calculations using analytical software SPSS (Predictive Solutions), Statistica and MS Excel calculation sheet. Findings: Our results show: 1) household consumption, understood as incurring expenses to purchase goods and services which takes place in the economy of a state, is the principal creator of state budget revenue based on VAT; 2) the level of VAT revenue from household consumption depends on the financial resources at the households' disposal, the way they spend them and the structure of such expenditure; 3) households are very diverse internally, while the size and structure of their purchases varies in time and is determined by many factors; 4) a diversified rate of VAT on particular goods and services purchased by households has a major impact on the level of state budget revenue from VAT returns; 5) financial transfers to households, which express a variety of social policy instruments applied by the state, including the pro-family policy, result in the increase of the state revenue from VAT; the effectiveness of such transfersboth for the realisation of state policy, as well as the increase of its tax revenuecan be stimulated by the appropriate matrix of VAT rates; 6) the limited availability or the lack of particular statistical data regarding the VAT burden on household expenditure, and the structure of state budget revenue based on VAT in the cross-section of tax rates, decreases analytical potential and the possibilities of drawing conclusions.

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“…The literature suggests that corruption affect tax revenue by its effect on tax evasion (Attila, Chambas, & Combes, [7]). Indeed, Hindriks, Keen, and Muthoo [43]) stress that corruption and income tax evasion are closely linked. Corruption undermines tax morale and tends to increase the underground economy.…”

Section: Independent Variablesmentioning

confidence: 99%

The Role of Income and Property Taxes in Tax Transition and the Mediating Effect of Financial Development

Adandohoin¹,

Brun²

2021

ECO

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This paper investigates second wave tax transition (transfer of tax pressure from border taxation towards domestic taxation) concerns in developing countries. It essentially focuses on the compensation effects of incomes and property taxes over international trade tax revenue losses in developing countries. Using a generalized method of moment estimator, we come to the evidence that, incomes and property taxes are poor instruments to balance trade tax revenue losses of trade liberalization in these countries. However, a mediating effect of financial development in the compensation nexus driven by corporate income taxes was found. We explain this result by the fact that the use of financial sector generates paper trails to government in order to enforce and raise corporate income taxes. Financial development may progressively crowd-out informal sector and leads to business formalization. Surprising, we do not find any mediating effect of financial development in the compensation patterns with personal income taxes. Nevertheless, some heterogeneities were discovered. Financial development mediates the compensation patterns of personal income taxes in Latin American countries, while the effect holds on corporate income taxes in African countries. We conclude the paper by highlighting the important role of financial development in second generation tax transition concerns over developing countries.

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The effect of card payments on VAT revenue: New evidence from Greece

Cited by 23 publications

References 3 publications

The effect of card payments on VAT revenue in the euro area: evidence from a panel VECM

The effect of card payments on VAT revenue in the euro area: evidence from a panel VECM

Household Consumption and VAT Revenue in Poland

The Role of Income and Property Taxes in Tax Transition and the Mediating Effect of Financial Development

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