This paper aims at providing a contribution in answering the question on how to distinguish between VAT/GST and direct taxes. We will adopt here an unusual strategy: instead of defining in general terms what are the distinguishing features respectively of VAT/GST and direct taxes, we will focus on the case of the Italian tax called “IRAP” (Imposta Regionale sulle Attività Produttive – Regional Tax on productive Activities) to show that interesting answers to this question can be found in the living tax law of the European Union and of its Member States. In short, we will not use a normative top-down strategy in order to suggest which should be the distinguishing features of VAT/GST vs. direct taxes, but we will use a bottom-up strategy by looking at how current tax law effectively unfolds in respect to the VAT/GST vs. direct taxes distinction. We will be using a tax classification which adopts an evolutionary approach . The paper also claims that the case of IRAP is a very useful one in the discussion about the distinction between GST/VAT and direct taxes because it shows that hybridization of tax structures is a quite common evolutionary phenomenon in current tax reforms. Rather than using clear-cut dichotomies – such as direct vs. indirect, income vs. consumption – it might prove more efficient to consider taxes which are hybrids and which may either belong to a common cluster of countries or constitute a one-off situation.
Hybrid taxes and the distinction between VAT/GST and direct taxes: the case of IRAP
GARBARINO, CARLO
2009
Abstract
This paper aims at providing a contribution in answering the question on how to distinguish between VAT/GST and direct taxes. We will adopt here an unusual strategy: instead of defining in general terms what are the distinguishing features respectively of VAT/GST and direct taxes, we will focus on the case of the Italian tax called “IRAP” (Imposta Regionale sulle Attività Produttive – Regional Tax on productive Activities) to show that interesting answers to this question can be found in the living tax law of the European Union and of its Member States. In short, we will not use a normative top-down strategy in order to suggest which should be the distinguishing features of VAT/GST vs. direct taxes, but we will use a bottom-up strategy by looking at how current tax law effectively unfolds in respect to the VAT/GST vs. direct taxes distinction. We will be using a tax classification which adopts an evolutionary approach . The paper also claims that the case of IRAP is a very useful one in the discussion about the distinction between GST/VAT and direct taxes because it shows that hybridization of tax structures is a quite common evolutionary phenomenon in current tax reforms. Rather than using clear-cut dichotomies – such as direct vs. indirect, income vs. consumption – it might prove more efficient to consider taxes which are hybrids and which may either belong to a common cluster of countries or constitute a one-off situation.I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.