Progressive Taxation and Inequality: Experience of Eastern Europe and Central Asia

According to recent analysis performed by the World Bank, the limited redistribution effect of the Albanian tax system is largely connected to the country’s heavy reliance on VAT for revenue collection. While VAT remains a major revenue-raiser across the globe, provides stable revenue streams and is relatively easy to collect, in some cases as in Albania it can have a poverty-increasing impact due to the regressivity of the tax. The problem can nevertheless be addressed through a thoughtful, pro-poor design of the tax.

Source: kluwertaxblog.com

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