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Is A Tax Cut On Cultural Goods Consumption Actually Desirable?:A Microsimulation Analysis

  • Juan Prieto-Rodriguez

    (Universidad de Oviedo & IEF)

  • Desiderio Romero-Jordan

    (IEF & Universidad Rey Juan Carlos)

  • Jose Felix Sanz-Sanz

    (IEF & Universidad Complutense de Madrid)

Proposals for tax cuts on cultural goods represent an ongoing debate in cultural policy. The main aim of this paper is to shed some light on this debate using microsimulation tools. First, we have estimated an Almost Ideal Demand System for nineteen different groups of goods, including cultural goods. Expenditure and price elasticities have been obtained from this model. Using this information, three alternatives cuts in the V.A.T. rate on cultural goods have been microsimulated and evaluated in terms of revenue and welfare. These types of fiscal reforms will lead to welfare and efficiency gains that can be described as regressive.

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File URL: http://128.118.178.162/eps/pe/papers/0402/0402001.pdf
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Paper provided by EconWPA in its series Public Economics with number 0402001.

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Length: 23 pages
Date of creation: 05 Feb 2004
Date of revision: 06 Feb 2004
Handle: RePEc:wpa:wuwppe:0402001
Note: Type of Document - pdf; prepared on WinXP; pages: 23
Contact details of provider: Web page: http://128.118.178.162

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  1. Louis Lévy-Garboua & Claude Montmarquette, 1996. "A microeconometric study of theatre demand," Journal of Cultural Economics, Springer, vol. 20(1), pages 25-50, March.
  2. M. Dolores Collado & Martín Browning, 1999. "-The Response Of Expenditures To Anticipated Income Changes: Panel Data Estimates," Working Papers. Serie AD 1999-19, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
  3. King, Mervyn A., 1983. "Welfare analysis of tax reforms using household data," Journal of Public Economics, Elsevier, vol. 21(2), pages 183-214, July.
  4. Blundell, Richard, 1988. "Consumer Behaviour: Theory and Empirical Evidence--a Survey," Economic Journal, Royal Economic Society, vol. 98(389), pages 16-65, March.
  5. Cathal O'Donoghue, 2001. "Dynamic Microsimulation: A Methodological Survey," Brazilian Electronic Journal of Economics, Department of Economics, Universidade Federal de Pernambuco, vol. 4(2), December.
  6. Deaton, Angus S & Muellbauer, John, 1980. "An Almost Ideal Demand System," American Economic Review, American Economic Association, vol. 70(3), pages 312-26, June.
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