Distributional effects and Income effects of value added tax at a rate of 9% on manufacturing sectors

Objectives such as increasing tax revenue, encouraging production and investment, reducing inequality and promoting social welfare are the main axes related to the tax system and its economic functioning. This study investigates the distributive effects and efficiency of value added tax collection at a rate of 9% on manufacturing sectors. This study is applied in terms of use. The effect of value added tax on Gini coefficient has been used as an indicator of income distribution. The analysis method is based on econometric method using data panel method and using EVIEWS software. And to evaluate the efficiency of tax collection (productivity ratio), the data-output analysis method related to 1390 (as the last available table) has been used. The results of data analysis showed that the implementation of value added tax at a rate of 9% on the manufacturing sector does not reduce the burden and will not affect the distribution of income. Also, the average efficiency of VAT collection by production and consumption in the years 94 to 1397 onwards is 39.5 and 0.32 percent, respectively. This level of tax collection efficiency and revenue from the implementation of value added tax on the manufacturing sector (given its rate) is at an almost low level.