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Not for Redistribution Table 1-4. 6 Ecuador France Germany, Fed. Rep. 4 ©International Monetary Fund. 9 Source: International Monetary Fund, Government Finance Statistics Yearbook, Vol. 11 (Washington, 1987). ©International Monetary Fund. 6 Table 1-5. 3 Ecuador France Germany, Fed. Rep. 4 .. 3 ©International Monetary Fund. 4 Source: International Monetary Fund, Government Finance Statistics Yearbook, Vol. 11 (Washington, 1987). ©International Monetary Fund. Not for Redistribution 30 VALUE-ADDED T A X : PRACTICE AND PROBLEMS VAT (method 1 discussed above).

Not for Redistribution 38 VALUE-ADDED TAX: PRACTICE AND PROBLEMS • Fear about regressivity. • Anticipated high administrative costs, especially to monitor refunds. • Buoyant revenue permitting larger government expenditures. • Potential evasion. • Compliance costs. • Effect on prices. • Incompatibility of VAT with a traditionally strong state sales tax structure. Each of these concerns is dealt with separately in later chapters. Overall, we have the picture of a general sales tax that has exploded from its final form in France in the late 1960s to become the dominant sales tax of the world.

Not for Redistribution 38 VALUE-ADDED TAX: PRACTICE AND PROBLEMS • Fear about regressivity. • Anticipated high administrative costs, especially to monitor refunds. • Buoyant revenue permitting larger government expenditures. • Potential evasion. • Compliance costs. • Effect on prices. • Incompatibility of VAT with a traditionally strong state sales tax structure. Each of these concerns is dealt with separately in later chapters. Overall, we have the picture of a general sales tax that has exploded from its final form in France in the late 1960s to become the dominant sales tax of the world.

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