Indirect taxes paid by the poor

Varun Kumar Vijay

Introduction
2 Motivation

3 One function of taxes is income redistribution, but the poor may actually be paying a significant percentage of their income as indirect taxes. The purpose of my study is to compute the amount of indirect taxes paid by a sample of 8 household in Gurgaon.

4 Methodology
• A daily survey to measure consumption of goods and services
• A daily recall period may result in a greater estimate as compared to a weekly or mothly recall period. I will discuss this variation with reference to literature.
• The sample includes both traditional households and bachelors.
• Visiting shops to estimate the VAT paid
• It is easy to calculate the VAT paid on packaged goods or goods exempt from VAT, but goods sold loose pose a problem.
• I will have to trace at least one production chain to understand at what levels tax is paid

5 Assumptions.
• A daily check on goods a person has actually purchased is too instrusive. I have therefore chosen to do a survey, making assumptions about the the reliability of reporting.
• I have chosen a sample of people working in my apartment complex. This may produce a bias in the data, a selection bias

6 Data analysis
• I will calculate the VAT paid by each household and person.
• I will investigate the causes for variation, especially causes apart from income.
• I will also investigate differences between the two types of households.

7 Comparision with other data sets
• I will compare my data with other data sets to test whether a daily recall produces a higher estimate.
• I will investigate the suitibility of a survey over other methods.

8 Conclusion/ Possible extensions

9 Appendix: data collected

ItemDate (DDMMYY)QuantityPrice per unitPrice