Horizontal Inequity and Vertical Redistribution with Indirect Taxes: the Greek Case

Georgia Kaplanoglou and David M Newbery

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

Abstract: Non-uniform indirect taxes treat equals and those unequal differently (horizontal inequity and vertical redistribution). Horizontal inequity is caused by taste differences among similar households, but some excises are designed to reflect social, not revealed, preferences. We apply two methodologies for decomposing the overall redistributive effect of the present and three alternative indirect tax structures into vertical and horizontal effects for Greece, using the Household Expenditure Survey micro-database. In all cases the taste component is considerable, even when we allow for social preferences, while improvements in vertical redistribution can be achieved, albeit at the cost of increased horizontal inequity.

Keywords: distributional effect of taxes; horizontal inequality; vertical redistribution; indirect tax reform; Greece. (search for similar items in EconPapers)
JEL-codes: D30 D63 H23 (search for similar items in EconPapers)
Pages: 24
Date: 2008-01
New Economics Papers: this item is included in nep-eec, nep-pbe and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Journal Article: Horizontal Inequity and Vertical Redistribution with Indirect Taxes: The Greek Case* (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:cam:camdae:0806

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