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Modelling the redistributive impact of indirect taxes in Europe: an application of EUROMOD

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  • O'Donoghue, Cathal
  • Baldini, Massimo
  • Mantovani, Daniela

Abstract

This paper describes a model to simulate expenditure and indirect taxes in 12 EU countries within the EUROMOD tax-benefit model. The paper outlines the types of indirect taxes in the countries examined. Validation checks are made on the effectiveness of the expenditure models used. The redistributive effect of indirect taxes is decomposed into the tax resulting from different commodity groups. Lastly the progressivity and redistributive effect of indirect taxes are examined and compared with income taxes, social insurance contributions (employee and employer) and the main social benefit groupings with all EU countries.
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Suggested Citation

  • O'Donoghue, Cathal & Baldini, Massimo & Mantovani, Daniela, 2004. "Modelling the redistributive impact of indirect taxes in Europe: an application of EUROMOD," EUROMOD Working Papers EM7/01, EUROMOD at the Institute for Social and Economic Research.
    • Handle: RePEc:ese:emodwp:em7-01
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    File URL: https://www.iser.essex.ac.uk/research/publications/working-papers/euromod/em7-01.pdf
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    References listed on IDEAS

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    7. Kaplanoglou, Georgia & Newbery, David Michael, 2003. "Indirect Taxation in Greece: Evaluation and Possible Reform," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 10(5), pages 511-533, September.
    8. Adam Wagstaff & Eddy van Doorslaer, 2001. "What Makes the Personal Income Tax Progressive? A Comparative Analysis for Fifteen OECD Countries," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 8(3), pages 299-316, May.
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    10. Sah, Raaj Kumar, 1983. "How much redistribution is possible through commodity taxes?," Journal of Public Economics, Elsevier, vol. 20(1), pages 89-101, February.
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    12. Nicholas Stern, 1990. "Uniformity Versus Selectivity In Indirect Taxation," Economics and Politics, Wiley Blackwell, vol. 2(1), pages 83-108, March.
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    Citations

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    Cited by:

    1. Francesca Gastaldi & Paolo Liberati & Elena Pisano & Simone Tedeschi, 2014. "Progressivity-Improving VAT Reforms in Italy," Working papers 6, Società Italiana di Economia Pubblica.
    2. Herwig Immervoll & Horacio Levy & José Ricardo Nogueira & Cathal O´Donoghue & Rozane Bezerra de Siqueira, 2005. "The Impact of Brazil´s Tax-Benefit System on Inequality and Poverty," Ibero America Institute for Econ. Research (IAI) Discussion Papers 117, Ibero-America Institute for Economic Research.
    3. Goñi, Edwin & Humberto López, J. & Servén, Luis, 2011. "Fiscal Redistribution and Income Inequality in Latin America," World Development, Elsevier, vol. 39(9), pages 1558-1569, September.
    4. Nico Pestel & Eric Sommer, 2013. "Shifting Taxes from Labor to Consumption: Efficient, but Regressive?," SOEPpapers on Multidisciplinary Panel Data Research 624, DIW Berlin, The German Socio-Economic Panel (SOEP).
    5. Lars-H. R. Siemers, 2014. "A General Microsimulation Model for the EU VAT with a specific Application to Germany," International Journal of Microsimulation, International Microsimulation Association, vol. 7(2), pages 40-93.
    6. repec:bla:revinw:v:63:y:2017:i:3:p:542-563 is not listed on IDEAS
    7. Thomas, Alastair, 2015. "The Distributional Effects of Consumption Taxes in New Zealand," Working Paper Series 4668, Victoria University of Wellington, Chair in Public Finance.
    8. Arsić, Milojko & Altiparmakov, Nikola, 2013. "Equity aspects of VAT in emerging European countries: A case study of Serbia," Economic Systems, Elsevier, vol. 37(2), pages 171-186.
    9. Cathal O'Donoghue & John Lennon & Stephen Hynes, 2009. "The Life-Cycle Income Analysis Model (LIAM): a study of a flexible dynamic microsimulation modelling computing framework," International Journal of Microsimulation, International Microsimulation Association, vol. 2(1), pages 16-31.
    10. repec:ijm:journl:v10:y:2017:i:1:p:39-72 is not listed on IDEAS
    11. K. Van Cauter & L. Van Meensel, 2006. "The redistributive character of taxes and social security contributions," Economic Review, National Bank of Belgium, issue i, pages 65-82, June.
    12. repec:ijm:journl:v10:y:2017:i:1:p:5-38 is not listed on IDEAS
    13. André Decoster & Jason Loughrey & Cathal O'Donoghue & Dirk Verwerft, 2011. "Microsimulation of indirect taxes," International Journal of Microsimulation, International Microsimulation Association, vol. 4(2), pages 41-56.
    14. Rozane Bezerra de Siqueira & José Ricardo Nogueira & Cathal O'Donoghue, 2003. "Simulating Brazil Tax-Benefit System Using Brahms, the Brazilian Household Microsimulation Model," Anais do XXXI Encontro Nacional de Economia [Proceedings of the 31th Brazilian Economics Meeting] b50, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].
    15. Nico Pestel & Eric Sommer, 2017. "Shifting Taxes from Labor to Consumption: More Employment and more Inequality?," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 63(3), pages 542-563, September.
    16. Sokolovska, Olena & Sokolovskyi, Dmytro, 2015. "VAT efficiency in the countries worldwide," MPRA Paper 66422, University Library of Munich, Germany.
    17. IonuÈ›-Constantin Cuceu, 2016. "The Distributional Effects of Value Added Tax," Ovidius University Annals, Economic Sciences Series, Ovidius University of Constantza, Faculty of Economic Sciences, vol. 0(2), pages 450-454, February.

    More about this item

    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

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