The purpose of this thesis is to assess the effects of substitu­tion of the value added tax for the existing set of indirect taxes in Greece in view of the prospective association of the country with the European Economic Community, and the necessity of harmonizing the Greek indirect tax system with the provisions of the indirect tax codes of the EEC members. In evaluating the validity of the results to be drawn in the course of our analysis, one should take into considera­tion the difficulties which are usually encountered in dealing with developing economies,- such as the relative scarcity of data, the inade­quacy of information provided, the limited extent of the few sample surveys which are carried out at irregular intervals, the reluctance of the authorities to release valuable details available to them,_ and,, so on.
Our thesis is divided into four parts. Part 1 contains a_ theore­tical discussion of the impact of the tax switch on the individuals' behaviour and on the various economic sectors, as well; an attempt is made to present an overall picture of the VAT repercussions by postulating a plausible pattern of redistribution of the tax burden and by invoking general laws of economic theory. The administrative aspects have not been overlooked in Part 1 and problems - other than purely economic, such as the subjection of new categories of taxpayers to the VAT regime, conformity with the new tax regulations, etc. are also mentioned.
Part II is devoted to a time-series analysis of the indirect tax collections with respect to the net national income. Subsequently, the regression of a hypothetical VAT on the NNY for the same period (1958 - 1972) is defined and the parameters obtained therefrom are compared with the corresponding parameters of the existing indirect taxes in order to specify the possible readjustments in the allocation of the tax- burden as among income classes. This part is the least satisfactory of all four, since it is unlikely that a simple linear regression equation with just one independent variable can actually explain such complex economic relationships as the secular impact of the growing NNY on the indirect tax revenue; probably, a multi-regression analysis which would take into account more than one variables e.g. population changes, alterations in the tax base and the tax rates rate of growth, interest rate, rate of inflations, etc. would give more reliable results. Unfortunately, data on the effects of changes in the provisions of the tax code on the indirect tax revenue are not available.
So, we had to confine ourselves to· one variable only in order to escape the danger of assigning large values to the coefficients of correlation between the_ tax and the remaining variables which weigh less heavily.
Part III deals with the effects of: the VAT alone, on a cross sectional basis; at this juncture, extensive use is made of the statis­tical methods of variance analysis and - to a lesser extent-covariance analysis. We apply a uniform 200/4 VAT rate on the consumption expenditure by income groups -the expenditure pattern has been outlined by other writers in individual studies carried out in Greece - and then proceed to evaluate the VAT burden. No comparison with the existing indirect tax burden is undertaken since our sources do not cite the distribution of the latter.
Lastly, in Part IV, we try to capture the overall effects of the VAT 0h the Greek economy, when the term "economy' is thought of as a network of inter-relating concerns. This is achieved by utilizing the only input -output table which is presently available for Greece. This last part contributes the most valuable evidence on the VAT effects, since it estimates with adequate accuracy, the extent of changes in many economic sizes -production, employment, imports, price level, consumption, etc. Though the input-output table is old, as it refers to the year 1960, it describes thre general tendencies quite in conformity with the conclusions reached in Part I.
In general, we state the potential repercussions of the VAT substitution in the form of an. extensive theoretical discussion in Part I , and then we try to corroborate the validity of our findings therein by using different statistical techniques in the next three parts. We believe that our work has exhausted every possible source of information in order to present a complete, impartial and consistent description of the problems connected with and the prospects arising out of the introduction of the VAT to Greece.