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Dopady změn daně z přidané hodnoty na reálné příjmy domácností
[The Impact of VAT Changes on the Households´ Real Incomes]

Author

Listed:
  • Libor Dušek
  • Petr Janský

Abstract

The article evaluates the distributional impacts of the value added tax changes in the Czech Republic using the Household Budget Survey, a representative sample of approximately 3000 households. It evaluates the impacts on the living standards both for the VAT reform that was actually approved in 2011, as well as for alternative reform proposals that were discussed during 2011 and that also considered a reduction in payroll tax rates. The estimates refl ect the recent empirical fi ndings about the incidence of consumption and payroll taxes. Unifying the VAT at a single tax rate has an almost proportional impact on the households from the 2nd to impact 10th income decile while having a disproportionately larger impact on the poorest decile. A reduction in the payroll tax would have reduced the progressivity of the tax system across the entire income range.

Suggested Citation

  • Libor Dušek & Petr Janský, 2012. "Dopady změn daně z přidané hodnoty na reálné příjmy domácností
    [The Impact of VAT Changes on the Households´ Real Incomes]
    ," Politická ekonomie, University of Economics, Prague, vol. 2012(3), pages 309-329.
  • Handle: RePEc:prg:jnlpol:v:2012:y:2012:i:3:id:844:p:309-329
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    References listed on IDEAS

    as
    1. Kevin Lang, 2003. "The Effect of the Payroll Tax on Earnings: A Test of Competing Models of Wage Determination," NBER Working Papers 9537, National Bureau of Economic Research, Inc.
    2. Besley, Timothy J. & Rosen, Harvey S., 1999. "Sales Taxes and Prices: An Empirical Analysis," National Tax Journal, National Tax Association;National Tax Journal, vol. 52(2), pages 157-178, June.
    3. Bingley, Paul & Lanot, Gauthier, 2002. "The incidence of income tax on wages and labour supply," Journal of Public Economics, Elsevier, vol. 83(2), pages 173-194, February.
    4. Daniel S. Hamermesh, 1980. "Factor Market Dynamics and the Incidence of Taxes and Subsidies," The Quarterly Journal of Economics, Oxford University Press, vol. 95(4), pages 751-764.
    5. Holmlund, Bertil, 1983. " Payroll Taxes and Wage Inflation: The Swedish Experience," Scandinavian Journal of Economics, Wiley Blackwell, vol. 85(1), pages 1-15.
    6. Poterba, James M., 1996. "Retail Price Reactions to Changes in State and Local Sales Taxes," National Tax Journal, National Tax Association;National Tax Journal, vol. 49(2), pages 165-176, June.
    7. Sam Peltzman, 2000. "Prices Rise Faster than They Fall," Journal of Political Economy, University of Chicago Press, vol. 108(3), pages 466-502, June.
    8. Poterba, James M., 1996. "Retail Price Reactions to Changes in State and Local Sales Taxes," National Tax Journal, National Tax Association, vol. 49(2), pages 165-76, June.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    value added tax; impact evaluation; households; evidence-based policy; Czech Republic;

    JEL classification:

    • D04 - Microeconomics - - General - - - Microeconomic Policy: Formulation; Implementation; Evaluation
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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