Who Really Benefits from Consumption Tax Cuts? Evidence from a Large VAT Reform in France

Youssef Benzarti and Dorian Carloni

American Economic Journal: Economic Policy, 2019, vol. 11, issue 1, 38-63

Abstract: This paper evaluates the incidence of a large cut in value-added taxes (VATs) for French sit-down restaurants in 2009. In contrast to previous studies, which only focus on the price effects of VAT reforms, we estimate the effects of the VAT cut on four groups: workers, firm owners, consumers, and suppliers of material goods. Using a difference-in-differences strategy on firm-level data, we find that: firm owners pocketed more than 55 percent of the VAT cut; consumers, sellers of material goods, and employees shared the remaining windfall with consumers benefiting the least; and the employment effects were limited.

JEL-codes: H22 H25 L83 (search for similar items in EconPapers)
Date: 2019
Note: DOI: 10.1257/pol.20170504
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Citations: View citations in EconPapers (73)

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Working Paper: Who Really Benefits from Consumption Tax Cuts? Evidence from a Large VAT Reform in France (2017)
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