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The Distributional Effects of Indirect Tax Changes in Italy

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Author Info
Paolo Liberati

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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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File URL: http://hdl.handle.net/10.1023/A:1008789432330
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Publisher 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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Related research
Keywords: Marginal tax reforms; Indirect taxes; Redistribution; Social welfare; Italy;

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References listed on IDEAS
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  3. Mayshar, Joram & Yitzhaki, Shlomo, 1996. "Dalton-improving tax reform: When households differ in ability and needs," Journal of Public Economics, Elsevier, vol. 62(3), pages 399-412, November. [Downloadable!] (restricted)
  4. Timothy J. Besley & Harvey S. Rosen, 1998. "Sales Taxes and Prices: An Empirical Analysis," NBER Working Papers 6667, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  5. Atkinson, Anthony B & Bourguignon, Francois, 1982. "The Comparison of Multi-Dimensioned Distributions of Economic Status," Review of Economic Studies, Blackwell Publishing, vol. 49(2), pages 183-201, April. [Downloadable!] (restricted)
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  8. Atkinson, A. B. & Bourguignon, F., 1990. "The design of direct taxation and family benefits," Journal of Public Economics, Elsevier, vol. 41(1), pages 3-29, February. [Downloadable!] (restricted)
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  11. Yitzhaki, Shlomo & Thirsk, Wayne, 1990. "Welfare dominance and the design of excise taxation in the Cote d'ivoire," Journal of Development Economics, Elsevier, vol. 33(1), pages 1-18, July. [Downloadable!] (restricted)
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    Other versions:
  16. Mayshar, Joram & Yitzhaki, Shlomo, 1995. "Dalton-Improving Indirect Tax Reform," American Economic Review, American Economic Association, vol. 85(4), pages 793-807, September. [Downloadable!] (restricted)
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  23. Yitzhaki, Shlomo & Lewis, Jeffrey D, 1996. "Guidelines on Searching for a Dalton-Improving Tax Reform: An Illustration with Data from Indonesia," World Bank Economic Review, Oxford University Press, vol. 10(3), pages 541-62, September.
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    Other versions:
  27. Shorrocks, Anthony F, 1983. "Ranking Income Distributions," Economica, London School of Economics and Political Science, vol. 50(197), pages 3-17, February. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. François Bourguignon & Amedeo Spadaro, 2006. "Microsimulation as a Tool for Evaluating Redistribution Policies," Working Papers 20, ECINEQ, Society for the Study of Economic Inequality. [Downloadable!]
    Other versions:
  2. 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. [Downloadable!]
  3. Stefan Mann, 2007. "Comparing Interpersonal Comparisons in Utility Theory and Happiness Research," Forum for Social Economics, Springer, vol. 36(1), pages 29-42, April. [Downloadable!] (restricted)
  4. 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. [Downloadable!]
  5. Alessandro Santoro, 2005. "Marginal commodity tax reforms: a survey," Public Economics 0508017, EconWPA. [Downloadable!]
  6. O'donoghue C & Baldini M & Mantovani D, 2004. "Modelling The Redistributive Impact Of Indirect Taxes In Europe: An Application Of EUROMOD," EUROMOD Working Papers EM7/01, EUROMOD at the Institute for Social and Economic Research. [Downloadable!]
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