THE RETAIL SALES TAX IN A DEVELOPING COUNTRY: COSTA RICA AND HONDURAS

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Abstract
The retail sales tax is being increasingly adopted in developing countries, even ivhere small tradesmen still dominate retailing. The article analyzes the experiences of Costa Rica and Honduras in adapting and implementing an administratively feasible retail sales tax. An analysis is made of the significance of the exemptions included in the tax, as well as the results of multi-rate taxation in Costa Rica versus the single rate tax in Honduras. The article estimates the proportion of the tax actually collected at the retail stage, as well as the allocational and efficiency effects of this hybrid tax.

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