EconPapers    
Economics at your fingertips  
 

Measuring the efficiency of VAT reforms: a demand system simulation approach

Peter Tóth (), Andrej Cupak () and Marian Rizov ()

Oxford Economic Papers, 2021, vol. 73, issue 3, 1218-1243

Abstract: Using an estimated demand model, we simulate household-level demand responses to the recent Slovak value added tax (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 (MWG). 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 MWGs can be helpful for designing both efficient and equitable VAT reforms.

JEL-codes: D12 H21 H31 (search for similar items in EconPapers)
Date: 2021
References: Add references at CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://hdl.handle.net/10.1093/oep/gpaa052 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
Journal Article: Measuring the Efficiency of VAT Reforms: A Demand System Simulation Approach (2021) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:oxecpp:v:73:y:2021:i:3:p:1218-1243.

Ordering information: This journal article can be ordered from
http://www.oup.co.uk/journals

Access Statistics for this article

Oxford Economic Papers is currently edited by A. Banerjee and James Forder

More articles in Oxford Economic Papers from Oxford University Press Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK.
Bibliographic data for series maintained by Oxford University Press () and Christopher F. Baum ().

 
Page updated 2022-01-10
Handle: RePEc:oup:oxecpp:v:73:y:2021:i:3:p:1218-1243.