Foreword and acknowledgements

Recent OECD research highlights the potential growth benefits of shifting the tax mix towards consumption taxes. In particular, there is a strong case for countries to broaden their value-added tax (VAT) bases, not just to raise revenue, but to reduce the substantial compliance costs and distortions to consumption decisions that arise from multi-rate VAT systems. In practice, however, governments have often been reluctant to embrace VAT base broadening measures because of a range of concerns. Foremost of these is the widely held view that the poor are hit hardest by increases in standard and reduced VAT rates.