Can we curb tax evasion with VAT? A study on the relation between the value added tax and the size of the informal sector in Africa
This essay provides an analysis of the relation between the value added tax (VAT) and the size of the informal sector in Africa. The proposed hypothesis is that due to incentive mechanisms provided by VAT, tax evasion, and hence the size of the informal sector, should decrease when VAT replaces other standard consumption taxes, primarily the retail sales tax (RST) and the turnover tax (TOT). The