Abstract

JARAMILLO, Christian  and  TOVAR, Jorge. The Impact of Value Added Tax on Household Expenditure in Colombia. Lect. Econ. [online]. 2008, n.68, pp. 67-93. ISSN 0120-2596.

this paper quantifies the impact of VAT on household expenditures by taking advantage of the relative variation of VAT in Colombia; this variation is usually used as identification strategy. To this end, we use data drawn from the Encuesta Continua de Hogares (Continuous Household Survey) and we correlate the VAT and household expenditures. In doing so, we estimate the impact of VAT on food, entertainment and telecommunication (cellular phone) expenditures. Our results suggest that an increment of VAT has positive effects on food and telecommunication expenditures and negative effects on entertainment and cultural goods. Additionally, our estimations show that an increasing VAT has differentiated effects depending on household demographic characteristics.

Keywords : Value Added Tax; fiscal incidence; household expenditure; household surveys.