The distributional effects of value added tax in Ireland

Leahy, Eimear, Lyons, Seán and Tol, Richard S J (2011) The distributional effects of value added tax in Ireland. Economic and Social Review, 42 (2). pp. 213-235. ISSN 0012-9984

Full text not available from this repository.

Abstract

In this paper we examine the distributional effects of Value Added Tax (VAT) in Ireland. Using the 2004/2005 Household Budget Survey, we assess the amount of VAT that households pay as a proportion of weekly disposable income. We measure VAT payments by equivalised income decile, households of different composition and different household sizes. The current system is highly regressive. With the use of a micro-simulation model we also estimate the impact of changing the VAT rate on certain groups of items and the associated change in revenue. We also consider how the imposition of a flat rate across all goods and services would affect households in different categories. The Irish Government has recently announced that it proposes to increase the standard rate of VAT to 22 per cent in 2013 and to 23 per cent in 2014. We examine the distributional implications of such increases. The general pattern of results shows that those hardest hit are households in the first income decile, households in rural areas, 6 person households and households containing a single adult with children.

Item Type: Article
Schools and Departments: School of Business, Management and Economics > Economics
Subjects: H Social Sciences > HB Economic theory. Demography
Related URLs:
Depositing User: Richard Tol
Date Deposited: 17 Apr 2012 13:13
Last Modified: 30 Nov 2012 17:11
URI: http://sro.sussex.ac.uk/id/eprint/38238
📧 Request an update