The effect of VAT on productivity and Determine the optimal rate its in Iran: a combination of Stochastic Frontier approach and pattern of endogenous growth

The purpose of this paper is that using a translog production function and random effect models show that the VAT impact on productivity in Iran. It also uses a model of endogenous growth include households, corporations and governments, the optimal rate of this tax is estimated by calibrating the model for Iran. Because productivity can be divided into three production efficiency, technical efficiency and scale efficiency decomposed (Kambakar and Lowell, 2000) We VAT impact on each of the three sections have reviewed. The results show that increasing the share of VAT positive impact on improving production efficiency, but its impact on technical efficiency and returns to scale is negative.the tax agencies and other firms producing can increase the productivity of their manufacturing process. The results of the estimated model shows that the optimal rate of VAT for the economy by taking 19 percent of the oil revenues and regardless of oil revenues is 21%.