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GINI DP 28: The impact of indirect taxes and imputed rent on inequality: A comparison with cash transfers and direct taxes in five EU countries

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  • Francesco Figari

    (University of Insubria)

  • Paulus, A. (Alari)

Abstract

This paper examines the redistributive impact of imputed rent (private and public) and indirect taxes (value added tax and excises), comparing this with the effects of cash transfers and direct taxes in five EU countries. The extended income concept, taking into account both imputed rent and indirect taxes, provides a more reliable picture of inequality differences across countries. Our results show that indirect taxes have a regressive effect with respect to income in all countries considered but always smaller in magnitude than other tax-benefit instruments. Imputed rent reduces overall inequality in particular where the prevalence of individuals living in own accommodation is high even among the poorest (Greece) and where the contribution of the public imputed rent is large (the UK).

Suggested Citation

  • Francesco Figari & Paulus, A. (Alari), 2012. "GINI DP 28: The impact of indirect taxes and imputed rent on inequality: A comparison with cash transfers and direct taxes in five EU countries," GINI Discussion Papers 28, AIAS, Amsterdam Institute for Advanced Labour Studies.
    • Handle: RePEc:aia:ginidp:28
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    More about this item

    Keywords

    Imputed rent; indirect taxes; European Union; household income; microsimulation; EUROMOD. JEL: C81; H23; D63;
    All these keywords.

    JEL classification:

    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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