Global Journal of Human Social Science, E: Economics, Volume 21 Issue 5

results described above show that social conflicts triggered an increase in the prices of goods and services included in the new VAT system and vice versa. These results supported our “ tax-burden ” hypothesis. while in the short-run, the results show a unidirectional relationship, running from VAT to social conflicts. This result substantiated the “ tax-conflicts ” hypothesis. From these results, it can be said that to contain social conflicts in the short-run, the government of Mozambique should exempt or reduce the VAT rate on essential goods and services, such as cereals and fuel, which are crucial for low-income households. A policy implication drawn from this study is that, in the long-run, to contain social conflicts, the government should design a new VAT system that is adapted to the local socio-economic conditions, which comes with adjustment programs for low-income households, so that VAT will not be regressive. In addition, the government of Mozambique should encourage services that boost domestic productions so that even when prices fluctuate internationally, the local impact will be minimized. Similarly, the government of Mozambique should seek to expand its tax base. VAT should not be seen as a substitute for other taxes, such as income tax or property tax. Further, the Mozambican government should move to the formal economy. By making these changes, the government will increase the sources of revenue to execute the government expenditures essential to contain social conflicts. R eferences R éférences R eferencias 1. Bahl, R. W., & R. M Bird, (2008). Tax policy in Developing Countries: Looking Back - And Forward. National Tax Journal V 2, pp. 279-301. 2. Bird, R. M., & E. M Zolt, (2005). Redistribution Via Taxation: The Limited Role of The Personal Income Tax in Developing Countries . Atlanta, Ga: Georgia State University Press. 3. Boadway, R., and M. Sato, (2009). 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O Sistema De Iva Em Moçambique: Adoção E Características Gerais. Nomos: Revista. do Programa Pós-Graduação em Volume XXI Issue V Version I 9 ( E ) Global Journal of Human Social Science - Year 2021 © 2021 Global Journals The Causal Relationship between Value-Added Tax and Social Conflicts: Evidence from Mozambique