Social Consequences From Changes in VAT
Since the late 60s years, VAT has become the major consumption tax in 105 countries, industrialized and developing countries.
The introduction of VAT in the middle of 1996 in Albania can be considered as the most important event in the evolution of the Albanian tax structure.
Despite the specific reasons for the adoption of VAT, income from it is different from one country to another.
The main argument for this variability is that a VAT designed appropriately for the conditions of the country's economic growth increases tax revenue by holding an economic and administrative costs low in relation to the cost of collection of revenue from other taxes on consumption.
From a study done by the IMF on the impact that comes from applying the percentage of the rates of VAT that is collected can be noted that on average about 0.
4% of GDP, the income tax for every 1% tax rate.
In industrialized countries the share of revenues from VAT captures 15% - 20% of total tax revenue or 5% - 8% of GDP.
While in developing countries although it is not the percentage level occupies a significant loss of tax revenue.
And unlike income tax, VAT no way influences the form and business.
A suitable VAT on specific economic conditions also provides national neutrality in the field of foreign trade and exports through non tax treatment of imports on an average domestic products.
The extension of VAT on "remote areas" There is a shared opinion that the VAT has become a "good" when it covers a much wider number of taxpayers and activities or say otherwise is a pyramid with base as wide.
Simply, this means that manufacturers, wholesalers and retailers should be part of their vast application of VAT law.
Throwing a glance at our country's implementation of VAT was launched mainly to larger manufacturing companies, as well as importers and wholesale traders of goods.
Further efforts to spread the tax administration to expand the base entities must register in VAT from fulfilling the criterion of realization of throughput over 8 million lek annually turnover (about ?uro 58,000) within a fiscal year.
This criterion is applicable to any type of activity from manufacturers to retail sales.
Many other countries have begun the implementation of VAT as in the case of Albania has enhanced its application in retail sales.
These countries include Argentina, Peru and francophone countries of Africa (which began in France over the taxation of production-type).
In these countries was noted that the application of VAT taxpayers only to manufacturing activities distorted the policy of tax neutrality and favored activities such as luxury products and excise, the biggest importers and suppliers of various services.
This caused an unequal distribution of fiscal burden and the regressive effects of VAT in relation to consumption.
As a result, create and outstanding problems (when manufacturers sell directly to retailers or the final consumers or create their direct channels of distribution).
In contrast to this stretch of the implementation of VAT, when it includes retail sales, problems like those above until minimized.
Neutrality gaining ground, after taxes in this way move closer to the final consumer.
Manufacturers or distributors can not be defined and taxable values are always the same as current prices.
In this way is not the rate at which VAT is what defines the set number of taxpayers, but the measure of expulsion from the subjects of small business.
Moreover, this exclusion is costly in terms of lost revenue as exempt small businesses will continue to pay VAT on purchases you perform.
While the extent of the VAT to the retail sales has much debate, different thoughts and opinions, regarding the extent that VAT in the public service sector has little thought or debate.
The fact is that many European countries are of the opinion that there is no sense of VAT charged with such activities (to exempt from payment of VAT) when it would only require increased funding, thus increasing expenditures.
But the practice for those countries that did not rule out payment of VAT that these types of supplies have been accompanied by increased accountability and transparency of the actions of state bodies.
Most recently in some European countries has launched a new practical taxation of public service sectors.
A sector that is being implemented a policy are different postal services, which ultimately included in the daily competition as a consumer of paper, newspapers or periodicals purchased by private or when distributions carry the mail carrier that is coming from the private sector.
Another similar case is the public transport rather than competing on equal terms with private transport.
Conditions of competition are distorted in these cases, where public sector services are non taxed and private sector services are loaded with all the taxes of the tax system.
Application of VAT in the public sector (combined with the subsidies) has the advantage of direct confrontation with the policy on the cost of state intervention.
"Difficult" areas to impose taxes While talking to a VAT with a broad base of more coverage of some sectors has been difficult to include in the "areas" of tax administration.
Thus, has not been easier to tax construction services, financial services, trade in excise goods, agro industry products.
If I mention the case of acquisitions of real estate for business purposes, in theory no different from purchases of food commodities, industrial, services, etc.
, that are taxable.
But until the value of buying a building represents the capitalized value of future services, taxation of this amount represents the tax that should have been set for services that are performed before purchasing the building.
For lease of real estate until it was decided that the payment of VAT it had a leak.
However, under a right application as required in order to see the creation of market value of buildings and transparency of the real estate market.
Stable and neutral application of VAT on real estate also requires that all construction materials, services, construction and leasing forms should be taxable at a standard fee.
The truth is that trying to apply this policy in Albania, but can not be said to have been neutral.
This comes from the past periods, because of distortion coming from the administration of taxable income.
In the case of exclusion of financial services (banks, etc), financial institutions do VAT purchase, but can not charge VAT to sell their services, perhaps the real impossibility of separation of part of banking services, insurance, etc..
Many countries (like Albania) have a clear explanation of that departs makes no exceptions.
Many additional services as part inside the financial services, such as: consulting legal, fiscal, are separate taxable.
Meanwhile, their exemption from VAT also avoids the cascade problem.
An interesting way taxation of banks is their taxation case from state of Israel.
Method used consists in that the value of adding as many counts of income from work and the normal benefits.
Other countries use different methods of road, which have their basis in the way of separation of the added value so that it can be for tax-base.
Agro-industry is another problematic area for VAT.
In our country it currently represents 49% of GDP and 50.
5% of working-age population is employed in that sector.
While the biggest value is added after the "fence" of the farm, the cost of creating the products are easily no disassembled.
However, these products make up and a great base for export.
Given that this sector's role becomes even more important for tax administration, regardless of political conditions and administrative costs of the problem in question.
Many countries have relieved farmers from VAT for purchasing some raw materials needed for them as seeds, pesticides, garbage, vehicles and agricultural equipment.
But every exclusion has served as an opportunity for tax avoidance.
And here at the risk of tax abuse is for real, especially in the case of use of agricultural machinery and other services outside of agriculture, e.
g.
tractors, that can really use in agriculture, but also can be used and to perform private work.
Although these exceptions is always to maintain domestic production against competition from imports not to cause scratching, especially in terms of social labor in this sector, however, lead to distortion of the facilities policy neutrality of VAT.
The introduction of VAT in the middle of 1996 in Albania can be considered as the most important event in the evolution of the Albanian tax structure.
Despite the specific reasons for the adoption of VAT, income from it is different from one country to another.
The main argument for this variability is that a VAT designed appropriately for the conditions of the country's economic growth increases tax revenue by holding an economic and administrative costs low in relation to the cost of collection of revenue from other taxes on consumption.
From a study done by the IMF on the impact that comes from applying the percentage of the rates of VAT that is collected can be noted that on average about 0.
4% of GDP, the income tax for every 1% tax rate.
In industrialized countries the share of revenues from VAT captures 15% - 20% of total tax revenue or 5% - 8% of GDP.
While in developing countries although it is not the percentage level occupies a significant loss of tax revenue.
And unlike income tax, VAT no way influences the form and business.
A suitable VAT on specific economic conditions also provides national neutrality in the field of foreign trade and exports through non tax treatment of imports on an average domestic products.
The extension of VAT on "remote areas" There is a shared opinion that the VAT has become a "good" when it covers a much wider number of taxpayers and activities or say otherwise is a pyramid with base as wide.
Simply, this means that manufacturers, wholesalers and retailers should be part of their vast application of VAT law.
Throwing a glance at our country's implementation of VAT was launched mainly to larger manufacturing companies, as well as importers and wholesale traders of goods.
Further efforts to spread the tax administration to expand the base entities must register in VAT from fulfilling the criterion of realization of throughput over 8 million lek annually turnover (about ?uro 58,000) within a fiscal year.
This criterion is applicable to any type of activity from manufacturers to retail sales.
Many other countries have begun the implementation of VAT as in the case of Albania has enhanced its application in retail sales.
These countries include Argentina, Peru and francophone countries of Africa (which began in France over the taxation of production-type).
In these countries was noted that the application of VAT taxpayers only to manufacturing activities distorted the policy of tax neutrality and favored activities such as luxury products and excise, the biggest importers and suppliers of various services.
This caused an unequal distribution of fiscal burden and the regressive effects of VAT in relation to consumption.
As a result, create and outstanding problems (when manufacturers sell directly to retailers or the final consumers or create their direct channels of distribution).
In contrast to this stretch of the implementation of VAT, when it includes retail sales, problems like those above until minimized.
Neutrality gaining ground, after taxes in this way move closer to the final consumer.
Manufacturers or distributors can not be defined and taxable values are always the same as current prices.
In this way is not the rate at which VAT is what defines the set number of taxpayers, but the measure of expulsion from the subjects of small business.
Moreover, this exclusion is costly in terms of lost revenue as exempt small businesses will continue to pay VAT on purchases you perform.
While the extent of the VAT to the retail sales has much debate, different thoughts and opinions, regarding the extent that VAT in the public service sector has little thought or debate.
The fact is that many European countries are of the opinion that there is no sense of VAT charged with such activities (to exempt from payment of VAT) when it would only require increased funding, thus increasing expenditures.
But the practice for those countries that did not rule out payment of VAT that these types of supplies have been accompanied by increased accountability and transparency of the actions of state bodies.
Most recently in some European countries has launched a new practical taxation of public service sectors.
A sector that is being implemented a policy are different postal services, which ultimately included in the daily competition as a consumer of paper, newspapers or periodicals purchased by private or when distributions carry the mail carrier that is coming from the private sector.
Another similar case is the public transport rather than competing on equal terms with private transport.
Conditions of competition are distorted in these cases, where public sector services are non taxed and private sector services are loaded with all the taxes of the tax system.
Application of VAT in the public sector (combined with the subsidies) has the advantage of direct confrontation with the policy on the cost of state intervention.
"Difficult" areas to impose taxes While talking to a VAT with a broad base of more coverage of some sectors has been difficult to include in the "areas" of tax administration.
Thus, has not been easier to tax construction services, financial services, trade in excise goods, agro industry products.
If I mention the case of acquisitions of real estate for business purposes, in theory no different from purchases of food commodities, industrial, services, etc.
, that are taxable.
But until the value of buying a building represents the capitalized value of future services, taxation of this amount represents the tax that should have been set for services that are performed before purchasing the building.
For lease of real estate until it was decided that the payment of VAT it had a leak.
However, under a right application as required in order to see the creation of market value of buildings and transparency of the real estate market.
Stable and neutral application of VAT on real estate also requires that all construction materials, services, construction and leasing forms should be taxable at a standard fee.
The truth is that trying to apply this policy in Albania, but can not be said to have been neutral.
This comes from the past periods, because of distortion coming from the administration of taxable income.
In the case of exclusion of financial services (banks, etc), financial institutions do VAT purchase, but can not charge VAT to sell their services, perhaps the real impossibility of separation of part of banking services, insurance, etc..
Many countries (like Albania) have a clear explanation of that departs makes no exceptions.
Many additional services as part inside the financial services, such as: consulting legal, fiscal, are separate taxable.
Meanwhile, their exemption from VAT also avoids the cascade problem.
An interesting way taxation of banks is their taxation case from state of Israel.
Method used consists in that the value of adding as many counts of income from work and the normal benefits.
Other countries use different methods of road, which have their basis in the way of separation of the added value so that it can be for tax-base.
Agro-industry is another problematic area for VAT.
In our country it currently represents 49% of GDP and 50.
5% of working-age population is employed in that sector.
While the biggest value is added after the "fence" of the farm, the cost of creating the products are easily no disassembled.
However, these products make up and a great base for export.
Given that this sector's role becomes even more important for tax administration, regardless of political conditions and administrative costs of the problem in question.
Many countries have relieved farmers from VAT for purchasing some raw materials needed for them as seeds, pesticides, garbage, vehicles and agricultural equipment.
But every exclusion has served as an opportunity for tax avoidance.
And here at the risk of tax abuse is for real, especially in the case of use of agricultural machinery and other services outside of agriculture, e.
g.
tractors, that can really use in agriculture, but also can be used and to perform private work.
Although these exceptions is always to maintain domestic production against competition from imports not to cause scratching, especially in terms of social labor in this sector, however, lead to distortion of the facilities policy neutrality of VAT.
