Economic Effects of VAT Reform in Germany

Stefan Boeters, Christoph Böhringer, Thiess Büttner and Margit Kraus

No 06-030, ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research

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, 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 produce substantial welfare gains for all households.

Keywords: VAT; tax reforms; distribution; efficiency; applied general equilibrium (search for similar items in EconPapers)
JEL-codes: D58 H22 H24 (search for similar items in EconPapers)
Date: 2006
New Economics Papers: this item is included in nep-acc, nep-eec, nep-pbe and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Journal Article: Economic effects of VAT reforms in Germany (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:zewdip:4614

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