A Revenue-neutral Shift from SSC to VAT: Analysis of the Distributional Impact for 12 EU-OECD Countries

Fidel Picos and Alastair Thomas

FinanzArchiv: Public Finance Analysis, 2015, vol. 71, issue 2, 278-298

Abstract: This paper assesses the distributional impact of a revenue-neutral shift from SSC to VAT in 12 EU-OECD countries. Using Household Budget Survey data, we simulate a 5-percentage-point SSC reduction funded by three alternative VAT reforms: an equal relative increase in all VAT rates, an increase in the standard VAT rate, and a shift to a uniform VAT rate. Our results suggest that all three reforms would be regressive in all 12 countries, that tax liabilities increase less for employees than for nonemployees, and that the uniform rate is the best for employees and the worst for nonemployees.

Keywords: tax reform; fiscal devaluation; redistribution; microsimulation (search for similar items in EconPapers)
JEL-codes: H23 H24 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (7)

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DOI: 10.1628/001522115X14186532237317

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