Citation:

Passouki ADOKI, Tom-irazou TCHALIM. "What VAT Policy Reduces Inequalities of Consumption and Income in Togo?" International Research Journal of Economics and Management Studies, Vol. 4, No. 2, pp. 179-186, 2025.

Abstract:

The objective of this article is to analyze the impact of a tax policy of reducing or increasing the VAT rate on consumption and income inequalities. To achieve this objective, this article uses the Computable General Equilibrium Model (CGEM), which is part of a dynamic recursive PEP-1-t framework, and the 2018 Social Accounting Matrix (MCS) of Togo. The results show, on the one hand, that a reduction in the VAT rate to 15% positively affects consumer spending and income. On the other hand, an increase in this rate to 20% has the opposite effect. The study concludes that the reduction or increase in the VAT rate does not influence the reduction of inequalities. So, she suggests that the current rate of 18% is retained but that the administration fights against the evasion and fraud of this tax. Also, there should be a removal of exemptions on primary goods, and instead, the government should make direct social transfers to poor households to reduce inequalities.

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Keywords:

VAT, MEGC, Inequalities.