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Economic effects of VAT reforms in Germany

[journal article]

Böhringer, Christoph; Boeters, Stefan; Kraus, Margit; Büttner, Thiess

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Please use the following Persistent Identifier (PID) to cite this document:http://nbn-resolving.de/urn:nbn:de:0168-ssoar-256860

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Abstract In the tax policy debate, differentiation of value-added taxes is often justified by distributional concerns. Our quantitative analysis for Germany indicates that such concerns are misplaced. We find that the abolition of VAT differentiation has only negligible redistributive effects. Instead, reduced VAT are found to act as industry-specific subsidies. Whereas the overall welfare effects of pure VAT reforms are very small, a revenue-neutral introduction of a harmonised VAT combined with reductions in the marginal income tax rates or social security contributions turns out to yield substantial welfare gains for all households.
Classification Public Finance
Free Keywords VAT; tax reforms; distribution; efficiency; applied general equilibrium; D58; H22; H24
Document language English
Publication Year 2010
Page/Pages p. 2165-2182
Journal Applied Economics, 42 (2010) 17
DOI http://dx.doi.org/10.1080/00036840701857952
Status Postprint; peer reviewed
Licence PEER Licence Agreement (applicable only to documents from PEER project)