Together, VAT and excise duties contribute around 1 in every 4 pounds raised by the UK government in tax – equivalent to around 10% of GDP. Getting the design and implementation of these taxes right is therefore very important, as is understanding their impact on consumers and the economy more broadly.
Our research examines the revenue, distributional and behavioural effect of VAT and excise duties, and the implications for the design of these taxes. We have also examined in detail the operation of the EU VAT system and its effects on trade and the single market, and have explored the role of VAT as a device for economic stimulus (such as with the temporary VAT cut in 2009). More recently, we have explored the role of VAT and duties in developing countries, where they are often an even more important source of revenue than in the UK.