Tax Policy:

Value-Added Tax: Administrative Costs Vary With Complexity and Number of Businesses

GGD-93-78: Published: May 3, 1993. Publicly Released: May 3, 1993.

Additional Materials:


Office of Public Affairs
(202) 512-4800

GAO provided information on the cost of administering value-added taxes (VAT), focusing on: (1) the processes and structure for administering VAT; (2) costs of administering basic VAT in the United States; (3) how alternative designs affect administrative costs; and (4) the necessary transition to implement VAT.

GAO found that: (1) single-rate, broad-based VAT would promote economic neutrality among goods and services, minimize compliance burdens for the taxpayer, and minimize administrative costs; (2) multiple tax rates and product exemptions would increase administrative costs; (3) more complicated VAT increase the opportunity for taxpayer errors and evasion and the difficulty of auditing administration; (4) according to a 1984 report, the Internal Revenue Service (IRS) would need 18 months to prepare for VAT; (5) IRS would need time to assess staffing requirements, hire new staff, and train staff on the new tax; (6) successful institution of VAT would require careful planning and an intensive educational campaign; and (7) educating the U.S. public on VAT would require tax administrators to educate the public, businesses, and tax preparers.

Sep 28, 2018

Sep 20, 2018

Sep 17, 2018

Sep 12, 2018

Sep 5, 2018

Aug 30, 2018

Aug 27, 2018

Aug 15, 2018

Jul 30, 2018

Jul 26, 2018

Looking for more? Browse all our products here