Production Responses and Tax Evasion with Limited State Capacity - Evidence from Major Reform in India

This project explores: what is the effect of switching from a retail sales tax to a VAT in a country with limited tax capacity and a large informal economy? The project explores this question through two ways: first, exploit individual firm level data. Second, utilise variation in tax rates across various goods and sectors within a state, variation across space and time, and variation in the exemption thresholds below which firms do not need to file a VAT return.

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