A Revenue Simulation Model for the Indirect Tax System in Puerto Rico

This article describes the indirect tax revenue simulation model developed for the Treasury Department of Puerto Rico. At the beginning, it delineates the model’s objectives and capabilities and details the array of tax policy measures and major modifications to the present tax system. It then explains the methodology used to arrive at the revenue projections, with a more precise explanation of some of technical details. Finally this paper presents the results of several simulations of combinations of alternative sales tax policies for consideration of policy makers.