چکیده:
In the Value-Added Tax (VAT) system some goods and services, such as banking
services, are exempted from taxes. Based on theoretical foundations, exempt treatment
leads to several distortions and inefficiencies in the economy. In order to understand the
importance of exemption as well as the fundamental role of financial intermediaries on
macroeconomic fluctuations and economic shocks, a Dynamic Stochastic General
Equilibrium (DSGE) model is designed. This model provides an empirical analysis for
policy simulations with consideration of VAT impacts on financial services under
different scenarios. Accordingly, the values of model parameters are estimated via
calibration method. Also the model accuracy is evaluated by Brooks & Gelman test and
impulse-response functions. Simulation results of the policy exercise suggest that shifting
from exemption to full taxation, reduces the costs for banks, and increases banks’ free
resources leading to higher investment and output through more bank loans.
خلاصه ماشینی:
Keywords: VAT, Banking Services, Exempt Treatment, Dynamic Stochastic General Equilibrium JEL Classification: H20, H25, H30, E52, E58 1 Introduction Value-added Tax is one of the attractive ways for governments to raise their revenues.
This study investigates the fluctuations of business cycles in Iran as well as the impact of shocks generated by value added tax on macroeconomic variables, by using a Stochastic Dynamic General Equilibrium (DSGE) Model with the banking sector added to it and consideration of VAT on banking services.
The results of the model, after calibration of the parameters, indicate that in case of oil revenue shocks, the inflation targeting scenario tends to fluctuate less in consumption, non-oil production, employment, inflation rate and stock of money.
(View the image of this page) 4 Estimating Model Parameters The model described in this paper, with the first-order conditions of households, firms, banks, as well as the behavioral functions of the government, the Central Bank and the oil sector, and also the market conditions and various market shocks, consists of 26 equations and 26 variables that are unknown.
As shown in figure 4, under exemption, increasing in value added tax rate has led to a reduction in bank reserves and, consequent reduction in concessional loans and investment and, as a result, output decreases.
The results of the impulse-response functions indicate that moving from exemption to full taxation, macroeconomic variables such as production, investment and consumption improve and this is an indication of the ineffectiveness of the tax exemption for banking services.