Modelling value-added tax in the presence of multiproduction and differentiated exemptions

We develop a framework for economy-wide modelling of value-added tax systems. Our framework models a number of complexities of VAT systems as they are implemented by tax agencies. In particular, we model multiple rates, multiple exemptions, multiple degrees of refundability across commodity users, and multi-product enterprises. A detailed VAT framework is important for correct modelling of VAT within a general equilibrium model. Such a framework is also of value in correctly representing the distribution of indirect tax payments within the database of a general equilibrium model, a prerequisite of accurate welfare analysis. We use the model to analyse the effects of simplifying Vietnam’s complex VAT system. We simplify the system by moving from three tax rates to one budget-neutral rate, while also removing many discretionary exemptions.value added tax; dynamic CGE model; Vietnam; indirect tax reform

Thermodynamics for Trajectories of a Mass Point

On the basis of information theory, a new formalism of classical non-relativistic mechanics of a mass point is proposed. The particle trajectories of a general dynamical system defined on an (1+n)-dimensional smooth manifold are treated geometrically as dynamical variables. Statistical mechanics of particle trajectories are constructed in a classical manner. Thermodynamic variables are introduced through a partition function based on a canonical ensemble of trajectories. Within this theoretical framework, classical mechanics can be interpreted as an equilibrium state of statistical mechanics. The relationships between classical and quantum mechanics are discussed from this statistical mechanical viewpoint. The maximum entropy principle is shown to provide a unified view of both classical and quantum mechanics.Comment: 22 pages, 1 figur