Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/233895
Authors: 
Tóth, Peter
Cupák, Andrej
Rizov, Marian
Year of Publication: 
2021
Citation: 
[Journal:] Oxford Economic Papers [ISSN:] 1464-3812 [Issue:] Advance articles (Article No.:) gpaa052
Abstract: 
Using an estimated demand model, we simulate household-level demand responses to the recent Slovak VAT reform and its hypothetical alternatives. We use simulation results, instead of the standard approximate measures, for constructing an improved efficiency indicator of tax reforms as a ratio of welfare and fiscal revenue effects and call it marginal welfare gain. We also contribute to the literature on optimal structure of indirect taxes and on marginal tax reforms with new evidence of actual and hypothetical reforms that could increase the welfare of households at zero fiscal costs. Regarding the general policy implications of our results we conclude that using a demand model to rank commodities according to their marginal welfare gains can be helpful for designing both efficient and equitable VAT reforms.
Subjects: 
consumer behavior
demand system
VAT reforms
equity
efficiency
JEL: 
D12
H21
H31
Published Version’s DOI: 
Document Type: 
Article
Document Version: 
Manuscript Version (Preprint)

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