Household Consumption Patterns, Indirect Tax Structures and Implications for Indirect Tax Harmonisation - A Three Country Perspective
The paper compares the indirect tax structures and consumption patterns of three European countries (the UK, Greece and Hungary) and studies the likely distributional impact of a potential convergence of their indirect tax systems by exploiting the rich source of Family Expenditure Survey microdata of these countries. The results reveal a southern/northern distinction in expenditure patterns, while, in terms of tax systems and inequality, the common history of a market economy within the European Union shared by the UK and Greece proves to be a strong determinant of common structures. Over the last decade indirect tax structures among the three countries converged, at the same time loosing part of their redistributive power. Indirect tax harmonisation towards a simple system of, for example, the UK type might reduce inequality.
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