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Modelling the Impact of Direct and Indirect Taxes Using Complementary Datasets

Author

Listed:
  • Savage, Michael

    (University College Dublin)

  • Callan, Tim

    (ESRI, Dublin)

Abstract

Comprehensive modelling of the impact of taxes and tax policy options requires data on the impact at micro-level of both direct and indirect taxes. There are, however, limits on the amount of data that can be gathered by any one survey. With some exceptions, most notably the Living Costs and Food Survey (LCF) in the UK, most national expenditure surveys are not suitable for use in detailed modelling of the direct tax and welfare system. This makes approaches which impute expenditure data into detailed income surveys of considerable interest. In this paper, we assess the sensitivity of the distributional effects of indirect taxes to the choice between actual, estimated and imputed expenditure data. By doing so, the analysis here serves as an updated picture of the distributional effects of the indirect tax system in Ireland, as well as a base for future microsimulation analysis of simultaneous direct tax, indirect tax and welfare reform.

Suggested Citation

  • Savage, Michael & Callan, Tim, 2015. "Modelling the Impact of Direct and Indirect Taxes Using Complementary Datasets," IZA Discussion Papers 8897, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp8897
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    Cited by:

    1. Callan, Tim & Bercholz, Maxime & Doorley, Karina & Keane, Claire & Regan, Mark & Savage, Michael & Walsh, John, 2017. "Distributional Impact of Tax and Welfare Policies: Budget 2018," Quarterly Economic Commentary: Special Articles, Economic and Social Research Institute (ESRI).
    2. Doorley, Karina & Callan, Tim & Savage, Michael, 2018. "Inequality in EU crisis countries. How effective were automatic stabilisers?," EUROMOD Working Papers EM10/18, EUROMOD at the Institute for Social and Economic Research.
    3. Callan, Tim & O'Dea, Cormac & Roantree, Barra & Savage, Michael, 2016. "Financial Incentives to Work: Comparing Ireland and the UK," Papers BP2017/2, Economic and Social Research Institute (ESRI).
    4. Callan, Tim & Regan, Mark & Savage, Michael & Walsh, John R, 2017. "Income distribution in Ireland: through recession, towards recovery," Papers BP2018/2, Economic and Social Research Institute (ESRI).
    5. David Madden & Michael Savage, 2020. "Which households matter most? Capturing equity considerations in tax reform via generalised social marginal welfare weights," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 27(1), pages 153-193, February.
    6. 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.
    7. Callan, Tim & Bercholz, Maxime & Doorley, Karina & Keane, Claire & Savage, Michael & Walsh, John R, 2016. "Distributional Impact of Tax and Welfare Policies: Budget 2017," Quarterly Economic Commentary: Special Articles, Economic and Social Research Institute (ESRI).
    8. McQuinn, Kieran & Foley, Daniel & Kelly, Elish, 2016. "Quarterly Economic Commentary, Winter 2016," Forecasting Report, Economic and Social Research Institute (ESRI), number QEC20164, June.
    9. David (David Patrick) Madden & Michael Savage, 2015. "Which Households Matter Most? Capturing Equity Considerations in Tax Reform via Generalised Social Marginal Welfare Weights," Working Papers 201502, School of Economics, University College Dublin.
    10. Wren, Maev-Ann & Connolly, Sheelah, 2016. "Challenges in Achieving Universal Healthcare in Ireland," Papers BP2017/1, Economic and Social Research Institute (ESRI).

    More about this item

    Keywords

    indirect tax; imputation; distribution; microsimulation;
    All these keywords.

    JEL classification:

    • D30 - Microeconomics - - Distribution - - - General
    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • 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

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