Guillermo Peña: A new approach to financial VAT and Does financial VAT affect the size of the financial sector?
OFS seminar. Guillermo Peña is a PhD student of Economics at the Department of Public Economics of the University of Zaragoza (Spain). He will present two recent papers, entitled “A new approach to financial VAT” and “Does financial VAT affect the size of the financial sector?”, both co-authored by Julio López Laborda.
Financial services are exempt from VAT in most countries; due to the difficulty to obtain the value added for each transaction. In this presentation, the speaker will present two recent papers written with the professor Julio López Laborda. First, a new proposal to applying VAT to financial services, taking into account the trade-off between simplicity and neutrality. The method, called “mobile-ratio”, achieves a reasonable way to allocate financial consumption between different transactions of financial services. Second, the speaker will also show some empirical evidence about the neutrality of current regimes of financial VAT in respect to the size of the financial sector size. On the article, they use data from 36 European Union and OECD countries for the period from 1961 to 2012, applying dynamic panel data techniques, concretely the GMM System. The results support the theoretical analysis that financial VAT has no significant effect on financial sector development.