By Steve Macey and Yuji Miyaki
As part of the Asian Development Bank’s (ADB) support to the Ministry of Finance in Armenia on VAT tax expenditures, a tool was developed to assess the distributional impact of these expenditures. A demonstration was also developed based on private education consumption in Armenia, which currently benefits from a VAT exemption.
This tool is valuable for countries conducting analysis on the distributional impact of VAT tax expenditures. It can be used by officials and policy makers to understand the distributional impact of VAT policy changes, shedding light on how the removal of VAT exemptions or zero-rating can primarily benefit wealthier groups, both in absolute and, at times, proportionate terms.