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Economic effects of VAT reforms in Germany
[journal article]
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, reduc... view more
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.... view less
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
https://doi.org/10.1080/00036840701857952
Status
Postprint; peer reviewed
Licence
PEER Licence Agreement (applicable only to documents from PEER project)