A Standard CGE Model for VAT Taxes

This study constructs a general CGE model for value-added tax (VAT). From limited publicly available VAT data, the model is capable of estimating all VAT statistics at the detailed sectoral level, including estimates of Output VAT, Input VAT, Net VAT, and VAT Refunds to each intermediate input, to capital use, and to trade-and-transport margins. The model can be used to simulate VAT policies and study their impacts, including changes in sector-specific VAT rates, on national and sectoral accounts.<br><br>The paper provides the complete mathematical form of the VAT model. The digital GAMS program of the model is also available for interested readers to work on.* The model can function as a backbone CGE structure for extended VAT studies on topics such as assessing effective VAT rates or estimating the net tax revenue from each individual sector if the U.S. adopts the VAT system. <br>