Is the value added tax reform a source of food insecurity and food poverty? The Burkina Faso case

Abstract

To finance its ambitious development programme, Burkina Faso aims to pass tax reforms by introducing a minimum value added tax (VAT) of 5% on agricultural goods and increasing VAT on water and electricity to 18%. In a country where nearly 10% of the population is food insecure, this reform could worsen the situation. We built a dynamic and recursive computable general equilibrium model with microsimulation to evaluate the effects of these tax reforms on poverty and food security. Results show that both proposed VAT changes lead to increased poverty and food insecurity, especially with the minimum VAT on agricultural products.