IDEAS home Printed from https://ideas.repec.org/a/prg/jnlpep/v2010y2010i2id368p133-149.html
   My bibliography  Save this article

Impact of Harmonisation on Distribution of VAT in the Czech Republic

Author

Listed:
  • Barbora Slintáková
  • Stanislav Klazar

Abstract

The aim of this paper is to analyse progressivity of value added tax in the Czech Republic under the framework of both annual incidence and lifetime incidence. Moreover, impact of the harmonisation of VAT rates connected with the accession of the Czech Republic to the EU on the income distribution is examined. The burden table serves to show the distribution of the VAT burden among households by income categories; the generalised entropy measures and the Gini coefficient are used for measurement of inequality of income. Results show that the Czech VAT is regressive when annual income is analysed while the lifetime income analysis indicated that VAT is progressive. Furthermore, the results suggest that the distribution of income (annual as well as lifetime) after taxation was more equal before the harmonisation, and that impact of the changes in VAT rates in 2004 was likely larger on the lower-income households.

Suggested Citation

  • Barbora Slintáková & Stanislav Klazar, 2010. "Impact of Harmonisation on Distribution of VAT in the Czech Republic," Prague Economic Papers, Prague University of Economics and Business, vol. 2010(2), pages 133-149.
    • Handle: RePEc:prg:jnlpep:v:2010:y:2010:i:2:id:368:p:133-149
    DOI: 10.18267/j.pep.368
    as

    Download full text from publisher

    File URL: http://pep.vse.cz/doi/10.18267/j.pep.368.html
    Download Restriction: free of charge
    File URL: http://pep.vse.cz/doi/10.18267/j.pep.368.pdf
    Download Restriction: free of charge
    File URL: https://libkey.io/10.18267/j.pep.368?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Alexandre Mathis, 2004. "VAT indicators," Taxation Papers 2, Directorate General Taxation and Customs Union, European Commission, revised Apr 2004.
    2. Gilbert E. Metcalf, 1994. "Lifecycle vs. Annual Perspectives on the Incidence of A Value Added Tax," NBER Working Papers 4619, National Bureau of Economic Research, Inc.
    3. repec:ebl:ecbull:v:4:y:2003:i:7:p:1-6 is not listed on IDEAS
    4. Zandvakili, Sourushe & Mills, Jeffrey A., 2001. "The distributional implications of tax and transfer programs in US," The Quarterly Review of Economics and Finance, Elsevier, vol. 41(2), pages 167-181.
    5. Gilbert E. Metcalf, 1994. "Life Cycle versus Annual Perspectives on the Incidence of a Value Added Tax," NBER Chapters, in: Tax Policy and the Economy, Volume 8, pages 45-64, National Bureau of Economic Research, Inc.
    6. Stéphane Mussard & Michel Terraza & Françoise Seyte, 2003. "Decomposition of Gini and the generalized entropy inequality measures," Economics Bulletin, AccessEcon, vol. 4(7), pages 1-6.
    7. repec:ebl:ecbull:v:4:y:2003:i:3:p:1-5 is not listed on IDEAS
    8. David Bradford, 1995. "The Distributional Analysis of Tax Policy," Books, American Enterprise Institute, number 52866, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Petr David, 2012. "Distribution of the increased tax burden for agricultural products and food in the Czech Republic," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 58(5), pages 239-248.
    2. Francesca Gastaldi & Paolo Liberati & Elena Pisano & Simone Tedeschi, 2014. "Progressivity-Improving VAT Reforms in Italy," Working papers 6, Società Italiana di Economia Pubblica.
    3. repec:prg:jnlpep:v:preprint:id:705:p:1-16 is not listed on IDEAS
    4. Petr Janský, 2014. "Consumer Demand System Estimation and Value Added Tax Reforms in the Czech Republic," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 64(3), pages 246-273, June.
    5. Daniela Šálková & Petr Kučera & Lukáš Moravec, 2017. "Effect of Introducing Second Reduced Rate of VAT on Consumer Purchase Behaviour with Gluten-free Food," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 65(3), pages 1045-1053.
    6. Artur Świstak & Sebastian Wawrzak & Agnieszka Alińska, 2015. "In pursuit of tax equity: lessons from VAT rate structure adjustment in Poland," Financial Theory and Practice, Institute of Public Finance, vol. 39(2), pages 115-137.
    7. Artem Krasnov & Aizada Okanova & Yana Yeraliyeva & Maral Kozhakhmetova & Alma Karshalova & Madina Aitkazina, 2020. "Development of the financial policy of the Eurasian economic union countries: tax harmonization," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 8(1), pages 138-149, September.
    8. Andrea Feher & Bogdan Virgil Condea & Daniela Harangus, 2019. "Impact of Harmonization on the Implicit Tax Rate of Consumption," Prague Economic Papers, Prague University of Economics and Business, vol. 2019(4), pages 449-464.
    9. Arsić, Milojko & Altiparmakov, Nikola, 2013. "Equity aspects of VAT in emerging European countries: A case study of Serbia," Economic Systems, Elsevier, vol. 37(2), pages 171-186.
    10. repec:ipf:finteo:v:39:y:2015:i:3:p:115-137 is not listed on IDEAS
    11. Zhila Abshari & Glenn P. Jenkins & Chun-Yan Kuo & Mostafa Shahee, 2021. "Progressive Taxation versus Progressive Targeted Transfers in the Design of a Sustainable Value Added Tax System," Sustainability, MDPI, vol. 13(20), pages 1-17, October.
    12. Hodzic, Sabina & Celebi, Hulya, 2017. "Value-Added Tax And Its Efficiency: Eu–28 And Turkey," UTMS Journal of Economics, University of Tourism and Management, Skopje, Macedonia, vol. 8(2), pages 79-90.
    13. John Obiora Anyaduba & Praise Oghenefejiro Otulugbu, 2019. "Taxation and Income Inequality in Nigeria," Accounting and Finance Research, Sciedu Press, vol. 8(3), pages 118-118, August.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Stanislav Klazar & Barbora Slintáková & Slavomíra Svátková & Martin Zelený, 2007. "Incidence of the VAT Rates Harmonisation in the Czech Republic [Dopad harmonizace sazeb DPH v ČR]," Acta Oeconomica Pragensia, Prague University of Economics and Business, vol. 2007(1), pages 45-56.
    2. Ruud de Mooij & Michael Keen, 2012. ""Fiscal Devaluation" and Fiscal Consolidation: The VAT in Troubled Times," NBER Chapters, in: Fiscal Policy after the Financial Crisis, pages 443-485, National Bureau of Economic Research, Inc.
    3. Daniel R. Feenberg & Andrew W. Mitrusi & James M. Poterba, 1997. "Distributional Effects of Adopting a National Retail Sales Tax," NBER Chapters, in: Tax Policy and the Economy, Volume 11, pages 49-90, National Bureau of Economic Research, Inc.
    4. Thomas, Alastair, 2015. "The Distributional Effects of Consumption Taxes in New Zealand," Working Paper Series 4668, Victoria University of Wellington, Chair in Public Finance.
    5. Burman, Leonard E. & Gale, William G. & Weiner, David, 1998. "Six Tax Laws Later: How Individuals' Marginal Federal Income Tax Rates Changed Between 1980 and 1995," National Tax Journal, National Tax Association, vol. 51(n. 3), pages 637-52, September.
    6. Burman, Leonard E. & Gale, William G. & Weiner, David, 1998. "Six Tax Laws Later: How Individuals' Marginal Federal Income Tax Rates Changed Between 1980 and 1995," National Tax Journal, National Tax Association;National Tax Journal, vol. 51(3), pages 637-652, September.
    7. Andrew Mitrusi & James Poterba, 2000. "The Distribution of Payroll and Income Tax Burdens, 1979-1999," NBER Working Papers 7707, National Bureau of Economic Research, Inc.
    8. repec:pri:cepsud:74bradford is not listed on IDEAS
    9. Kenneth A. Lewis & Laurence S. Seidman, 2000. "Transitional Protection During Conversion to a Personal Consumption Tax," Public Finance Review, , vol. 28(2), pages 99-119, March.
    10. Fullerton, Don & Metcalf, Gilbert E., 2002. "Tax incidence," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 4, chapter 26, pages 1787-1872, Elsevier.
    11. Sulekha Hembram & Sushil Kr. Haldar, 2021. "Revisiting global income convergence: 1990-2018 A disaggregated analysis," Economics Bulletin, AccessEcon, vol. 41(3), pages 952-974.
    12. Straathof, Sebastiaan M., 2007. "Shannon's entropy as an index of product variety," Economics Letters, Elsevier, vol. 94(2), pages 297-303, February.
    13. Maria Ana Lugo & Esfandiar Maasoumi, 2008. "Multidimensional Poverty Measures from an Information Theory Perspective," Working Papers 85, ECINEQ, Society for the Study of Economic Inequality.
    14. Stéphane Mussard & Pi Alperin María Noel & Françoise Seyte & Michel Terraza, 2005. "Extensions Of Dagum’S Gini Decomposition," Cahiers de recherche 05-07, Departement d'économique de l'École de gestion à l'Université de Sherbrooke.
    15. David F. Bradford, 2001. "Reforming Budgetary Language," Working Papers 128, Princeton University, Department of Economics, Center for Economic Policy Studies..
    16. C. Chameni Nembua, 2005. "A three components subgroup decomposition of the Hirschman-Herfindahl index and household's income inequalities in Cameroon," Applied Economics Letters, Taylor & Francis Journals, vol. 12(15), pages 941-947.
    17. Chen, Jiandong & Xu, Chong & Wang, Yuzhi & Li, Ding & Song, Malin, 2021. "Carbon neutrality based on vegetation carbon sequestration for China's cities and counties: Trend, inequality and driver," Resources Policy, Elsevier, vol. 74(C).
    18. D'ANGELO Emanuela & LILLA Marco, 2007. "Is there more than one linkage between Social Network and Inequality?," IRISS Working Paper Series 2007-12, IRISS at CEPS/INSTEAD.
    19. Chun-Yan Kuo & Hatice Jenkins & Glenn Jenkins, 2006. "Is The Value Added Tax Naturally Progressive?," Working Paper 1059, Economics Department, Queen's University.
    20. Cossio Muñoz, Fernando, 2006. "Informe de Equidad Fiscal de Bolivia: Incidencia Distributiva de la Política Fiscal [Social Incidence of the Fiscal Policy in Bolivia]," MPRA Paper 91343, University Library of Munich, Germany.
    21. Chemi Gotlibovski & Nir Yaacobi, 2018. "Should Israel Adopt Differential Vat? Examining The Expected Implications In View Of Theory And International Experience," Israel Economic Review, Bank of Israel, vol. 16(2), pages 97-139.

    More about this item

    Keywords

    value added tax; tax incidence; progressivity; redistributive effect; inequality measures; tax harmonisation;
    All these keywords.

    JEL classification:

    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:prg:jnlpep:v:2010:y:2010:i:2:id:368:p:133-149. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Stanislav Vojir (email available below). General contact details of provider: https://edirc.repec.org/data/uevsecz.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.