- Title
- Is there a viable way to tax the consumption of immovable property that is more consistent with the economic objective of the VAT?
- Creator
- Peacock, Christine
- Date
- 2018
- Type
- Text; Journal article
- Identifier
- http://researchonline.federation.edu.au/vital/access/HandleResolver/1959.17/167666
- Identifier
- vital:13704
- Identifier
- ISBN:1832-911X
- Abstract
- The design of value added tax (VAT)† systems is generally based on an assumption known as the ‘prepaid method’. Under this method, it is assumed that the value of goods at the time of purchase (the first transaction) is equal to the value of the use and enjoyment (consumption) by the owner of the goods. VAT is imposed on the first purchase of goods, and later sales of goods from consumer to consumer are not subject to VAT. This generally produces the correct result. However, the general appreciation in the value of immovable property may result in the value of total consumption of owner-occupied housing being greater than the value that was taxed at the time of first purchase. This is inconsistent with the economic objective of VAT, which is to tax the flow of consumption. A possible alternative would be to subject imputed rent (the net value of services rendered by a house to its owner-occupier for which they would otherwise pay cash rent to a landlord) to VAT. Imputed rent has been regarded as part of the tax base for income tax purposes in many countries. However, no country includes imputed rent in its VAT base. This article outlines some of the practical considerations that would be involved in including imputed rent in the VAT base.
- Publisher
- Australasian Tax Teachers' Association
- Relation
- Journal of the Australasian Tax Teachers Association Vol. 13, no. 1 (2018), p. 336-350
- Rights
- Copyright © Australasian Tax Teachers Association
- Rights
- Open Access
- Rights
- This metadata is freely available under a CCO license
- Subject
- 1801 Law; Taxes; VAT; Economic growth
- Full Text
- Reviewed
- Hits: 251
- Visitors: 369
- Downloads: 141
Thumbnail | File | Description | Size | Format | |||
---|---|---|---|---|---|---|---|
View Details Download | SOURCE1 | Published version | 216 KB | Adobe Acrobat PDF | View Details Download |