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The Distributional Effects of Value Added Tax in Ireland. ESRI WP366. December 2010

Leahy, Eimear and Lyons, Sean and Tol, Richard S.J. (2010) The Distributional Effects of Value Added Tax in Ireland. ESRI WP366. December 2010. [Working Paper]

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    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% in 2013 and to 23% 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.

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    Item Type: Working Paper
    Subjects for non-EU documents: EU policies and themes > Policies & related activities > tax policy
    Subjects for EU documents: UNSPECIFIED
    EU Series and Periodicals: UNSPECIFIED
    EU Annual Reports: UNSPECIFIED
    Series: Series > Economic and Social Research Institute (ESRI), Dublin > ESRI Working Papers
    Depositing User: Alyssa McDonald
    Official EU Document: No
    Language: English
    Date Deposited: 02 Oct 2017 16:15
    Number of Pages: 37
    Last Modified: 02 Oct 2017 16:15

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