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Economic Effects of VAT Reform in Germany

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Author Info
Boeters, Stefan
Böhringer, Christoph
Büttner, Thiess
Kraus, Margit

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Abstract

In the tax policy debate, differentiation of value-added taxes is often justified by distributional concerns. Our quantitative analysis for Germany indicates that such concerns are misplaced. We find that the abolition of VAT differentiation has only negligible redistributive effects. Instead, reduced VAT are found to act as industry-specific subsidies. Whereas the overall welfare effects of pure VAT reforms are very small, a revenue-neutral introduction of a harmonised VAT combined with reductions in the marginal income tax rates or social security contributions turns out to produce substantial welfare gains for all households. --

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Publisher Info
Paper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 06-30.

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Date of creation: 2006
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Handle: RePEc:zbw:zewdip:4614

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Related research
Keywords: VAT; tax reforms; distribution; efficiency; applied general equilibrium;

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Find related papers by JEL classification:
H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models

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References listed on IDEAS
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. Christoph Böhringer & Andreas Lange, 2005. "Economic Implications of Alternative Allocation Schemes for Emission Allowances," Scandinavian Journal of Economics, Blackwell Publishing, vol. 107(3), pages 563-581, 09. [Downloadable!] (restricted)
  2. Keen, Michael & Mintz, Jack, 2004. "The optimal threshold for a value-added tax," Journal of Public Economics, Elsevier, vol. 88(3-4), pages 559-576, March. [Downloadable!] (restricted)
  3. Koskela, Erkki & Vilmunen, Jouko, 1996. "Tax progression is good for employment in popular models of trade union behaviour," Labour Economics, Elsevier, vol. 3(1), pages 65-80, August. [Downloadable!] (restricted)
  4. Bob Hamilton & John Whalley, 1989. "Reforming Indirect Taxes in Canada: Some General Equilibrium Estimates," Canadian Journal of Economics, Canadian Economics Association, vol. 22(3), pages 561-75, August. [Downloadable!] (restricted)
  5. Kenneth R. French & James M. Poterba, 1991. "Investor Diversification and International Equity Markets," NBER Working Papers 3609, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  6. Turid Åvitsland and Jørgen Aasness, 2004. "Combining CGE and microsimulation models: Effects on equality of VAT reforms," Discussion Papers 392, Research Department of Statistics Norway. [Downloadable!]
  7. Boeters, Stefan & Böhringer, Christoph & Feil, Michael, 2002. "Taxation and unemployment : an applied general equilibrium approach for Germany," ZEW Discussion Papers 02-39, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
  8. Ruud de Mooij & Sjef Ederveen, . "Taxation and foreign direct investment: A synthesis of empirical research," CPB Discussion Papers 3, CPB Netherlands Bureau for Economic Policy Analysis. [Downloadable!]
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  9. Peter B. Dixon & Maureen T. Rimmer, 1999. "Changes in Indirect Taxes in Australia: A Dynamic General Equilibrium Analysis," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 32(4), pages 327-348. [Downloadable!] (restricted)
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  1. Saveyn Bert & Van Regemorter Denise, 2007. "Environmental Policy in a Federal State - A Regional CGE Analysis of the NEC Directive in Belgium," Energy, Transport and Environment Working Papers Series ete0701, Katholieke Universiteit Leuven, Centrum voor Economische Studiën, Energy, Transport and Environment. [Downloadable!]
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