The Optimal Tax Rate Determination with Emphasis on VAT

Taxes are the most stable government revenues and they can be used as tools to implement social justice and to encourage investment. The purpose of this article is to determine the optimal vat rate by using a neoclassical growth model in Iran. To this end a generalized segmented growth model including household, firm and government was first developed. Using the parameters of the Iranian economy and social accounts matrix (Sam 1395), the mentioned model is calibrated and the optimal tax rate is determined in two scenarios in such a way that it receives the most income and has the least disruption. The research method is analytical and using a macroeconomic model. The research model is in the framework of computable general equilibrium model (CGE) and tax achievement in different scenarios. The results show that the implementation of vat at different Rates and in two scenarios 5 and 10 percent will increase the general level of prices, reduce GDP, increase government revenue, reduce household income and expenditure, increased total absorption and exchange rate.