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Annual and lifetime incidence of the value-added tax in France

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  • S. GEORGES-KOT

    (Insee)

Abstract

Consumption taxes represent on average 30% of the total tax revenu and 10% of the GDP in OECD countries. In France, the value-added tax (VAT) makes up most of consumption taxes and constitutes 50% of the states fiscal resources, yet progress still needs to be made to fully understand its distributional impact. In particular, since savings partly serve to finance future consumption, the incidence of consumption taxes should be measured over the entire life-cycle of individuals. This has proven difficult to do because appropriate data does not exist. Consumption surveys necessary to impute taxes paid by households are cumbersome and consequently bear no panel dimension. However, repeated cross-sections for such surveys are almost always available. In this paper, I take advantage of this feature to estimate a simple parametric model for the joint dynamics of income and VAT over the life of individuals. I then use simulation methods to recover the joint distribution of permanent income and VAT. According to the estimates, permanent VAT is half less regressive than annual VAT.

Suggested Citation

  • S. Georges-Kot, 2015. "Annual and lifetime incidence of the value-added tax in France," Documents de Travail de l'Insee - INSEE Working Papers g2015-12, Institut National de la Statistique et des Etudes Economiques.
    • Handle: RePEc:nse:doctra:g2015-12
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    File URL: https://www.bnsp.insee.fr/ark:/12148/bc6p06zrbqw/f1.pdf
    File Function: Document de travail de la DESE numéro G2015-12
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    References listed on IDEAS

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    2. Åsa Johansson, 2016. "Public Finance, Economic Growth and Inequality: A Survey of the Evidence," OECD Economics Department Working Papers 1346, OECD Publishing.
    3. Julio López Laborda & Carmen Marín González & Jorge Onrubia, 2024. "Observatorio sobre el reparto de los impuestos y las prestaciones entre los hogares españoles. Octavo informe – 2021," Studies on the Spanish Economy eee2024-04, FEDEA.
    4. Julio López Laborda & Carmen Marín González & Jorge Onrubia, 2019. "Observatorio sobre el reparto de los impuestos y las prestaciones monetarias entre los hogares españoles. Cuarto informe: 2016 y 2017," Studies on the Spanish Economy eee2019-36, FEDEA.
    5. Julio López Laborda & Carmen Marín & Jorge Onrubia, 2023. "Observatorio sobre el reparto de los impuestos y las prestaciones entre los hogares españoles," Studies on the Spanish Economy eee2023-01, FEDEA.
    6. Julio López Laborda & Carmen Marín & Jorge Onrubia, 2021. "Observatorio sobre el reparto de los impuestos y las prestaciones entre los hogares españoles. Sexto informe – 2017 y 2018," Studies on the Spanish Economy eee2021-33, FEDEA.

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    More about this item

    Keywords

    consumption dynamics; income dynamics; value-added tax; life cycle;
    All these keywords.

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence

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