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The Distributional Effects of Indirect Tax Changes in Italy

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  • Paolo Liberati

Abstract

This paper evaluatesthe distributional and welfare effects of two recent changesof Value Added Tax (VAT) and excise taxes in Italy applying andcomparing two related and complementary methods of analysis:the first based on the distributional characteristics of Feldstein(1972) and recently applied by Newbery (1995); the second basedon the theory of marginal dominance developed by Mayshar andYitzhaki (1996). The paper finds no evidence that the reformshave redistributed purchasing power among households. But themost striking result is that a simpler two-rate VAT structure,set according to the European directives on VAT coordination,could have replaced the present system producing the same revenueand increasing welfare. This last result provides a clear instancein which reducing the number of VAT rates can be welcome evenin the presence of distributional concerns. Copyright Kluwer Academic Publishers 2001

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Bibliographic Info

Article provided by Springer in its journal International Tax and Public Finance.

Volume (Year): 8 (2001)
Issue (Month): 1 (January)
Pages: 27-51

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Handle: RePEc:kap:itaxpf:v:8:y:2001:i:1:p:27-51

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Web page: http://www.springerlink.com/link.asp?id=102915

Related research

Keywords: Marginal tax reforms; Indirect taxes; Redistribution; Social welfare; Italy;

References

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Citations

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Cited by:
  1. Stefan Mann, 2007. "Comparing Interpersonal Comparisons in Utility Theory and Happiness Research," Forum for Social Economics, Springer, vol. 36(1), pages 29-42, April.
  2. Oya Pinar Ardic & Burcay Erus & Gurcan Soydan, 2010. "An Evaluation of Indirect Taxes in Turkey," Working Papers 2010/01, Bogazici University, Department of Economics.
  3. Jason Loughrey & Cathal O’Donoghue, 2012. "The Welfare Impact of Price Changes on Household Welfare and Inequality 1999-2011," The Economic and Social Review, Economic and Social Studies, vol. 43(1), pages 31–66.
  4. Horacio Piffano, 2013. "La Incidencia de las Políticas Públicas sobre la Actividad Rural, el Escenario Comparado y la Propuesta de Reforma Tributaria," Department of Economics, Working Papers 096, Departamento de Economía, Facultad de Ciencias Económicas, Universidad Nacional de La Plata.
  5. Saadia Refaqat, 2005. "Redistributive Impact of GST Tax Reform: Pakistan, 1990-2001," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 44(4), pages 841-862.
  6. François Bourguignon & Amadéo Spadaro, 2005. "Microsimulation as a tool for evaluating redistribution policies," PSE Working Papers halshs-00590863, HAL.
  7. repec:ese:emodwp:em7-01 is not listed on IDEAS
  8. Paolo Liberati, 2000. "Did VAT change redistribute purchasing power in Italy?," Working Papers 40, University of Rome La Sapienza, Department of Public Economics.
  9. Alessandro Santoro, 2005. "Marginal commodity tax reforms: a survey," Public Economics 0508017, EconWPA.
  10. Mohsin, Asma & Zaman, Khalid, 2012. "Distributional effects of rising food prices in Pakistan: Evidence from HIES 2001–02 and 2005–06 survey," Economic Modelling, Elsevier, vol. 29(5), pages 1986-1995.
  11. Alessandra Cepparulo & Francesca Gastaldi & Paolo Liberati, 2010. "The distributional and welfare impact of inflation in Italy," Working Papers 134, University of Rome La Sapienza, Department of Public Economics.
  12. Georgia Kaplanoglou, 2004. "Household Consumption Patterns, Indirect Tax Structures and Implications for Indirect Tax Harmonisation - A Three Country Perspective," The Economic and Social Review, Economic and Social Studies, vol. 35(1), pages 83-107.

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