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Please use this identifier to cite or link to this item: https://hdl.handle.net/2445/204640
Tax Reforms and Network Effects [WP]
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This paper investigates the effects of a tax reform that eliminates tax rate heterogeneity and cumulative taxation using a general equilibrium model with multiple sectors with market power. Industries are connected through input-output linkages, and changes in taxation are not confined within industries. We calibrate the model to Brazil, a country with a highly distorted tax system. The revenue-neutral tax reform generates gains of 7.8% of GDP and 1.9% of welfare. Just eliminating VAT rate dispersion leads to a 5.9% increase in GDP. Due to propagation effects, in 10 sectors direct taxes increased but output and profits did not fall.
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DELALIBERA, Bruno R., et al. Tax Reforms and Network Effects [WP]. UB Economics – Working Papers. 2023. Vol. E23/456. [consulted: 13 of October of 2026]. Available at: https://hdl.handle.net/2445/204640