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Using the FIDELIO Model to Estimate the Effects of the Tax Reform 2015-16 on Net Output

Gerhard Streicher ()

WIFO Bulletin, 2015, vol. 20, issue 23, 266-272

Abstract: We estimate the effects of the Austrian tax reform of 2015-16 by using the econometric input-output model FIDELIO, which features an in-depth treatment of both private and public households' revenues, expenditures, budgets and consumption as well as price transmission. According to the simulations, the reform will, to some extent, succeed in boosting domestic demand, with private consumption rising by almost € 2.5 billion; both net output and GDP will rise perceptibly by € 290 million and € 1.35 billion, respectively. Among the sectors that profit most from the proposed changes in the tax regime are those with high income elasticities (and low import shares): real estate activities, (retail) trade, and financial services. The food production sector aside, manufacturing will experience very modest gains only, as a large share of its products is imported. High income elasticity, however, leads to moderate gains for hotels and restaurants, in spite of a higher value-added tax on hotel services and the upward pressure on prices due to fraud-preventing measures (especially the obligation to introduce cash registers).

Keywords: Tax simulation; input-output model; net output (search for similar items in EconPapers)
Date: 2015
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