Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/113343
Authors: 
Decoster, André
Perelman, Sergio
Vandelannoote, Dieter
Vanheukelom, Toon
Verbist, Gerlinde
Year of Publication: 
2015
Series/Report no.: 
EUROMOD Working Paper EM10/15
Abstract: 
Belgium has seen major changes in its tax-benefit system over the past twenty years. These changes have, to a large extent, co-determined the evolution of disposable incomes of Belgian households on one hand, and their incentives to work on the other. In this paper we assess equity and efficiency aspects of changes in tax-benefit policies over the full course of 1992-2012. By simulating effects of current and past tax-benefit policies using the microsimulation model MEFISTO-EUROMOD, we summarize the shifts in policy orientation over this period using two summary measures of redistribution and work incentives.Our three main findings are: 1) the changes in the tax-benefit system have to a large extent been pro-poor, and redistribution has been increased; 2) the introduction of an earned income tax credit and the lowering of personal income taxes has contributed to improve work incentives, but this effect was partially eroded by an increase in unemployment benefits since 2000; 3) the results crucially depend on whether one chooses as 'no policy change' counterfactual indexation with inflation or indexation with nominal wage growth.
Subjects: 
Labour supply
Marginal Cost of Public Funds
Microsimulation
Redistribution
Taxation
Tax-Benefit system
JEL: 
C81
H21
H41
J20
Document Type: 
Working Paper

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