Who Really Benefits from Consumption Tax Cuts? Evidence from a Large VAT Reform in France
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AbstractThis paper evaluates the incidence of a large cut in value-added taxes (VATs) for French sit-down restaurants in 2009. In contrast to previous studies, which only focus on the price effects of VAT reforms, we estimate the effects of the VAT cut on four groups: workers, firm owners, consumers, and suppliers of material goods. Using a difference-in-differences strategy on firm-level data, we find that: firm owners pocketed more than 55 percent of the VAT cut; consumers, sellers of material goods, and employees shared the remaining windfall with consumers benefiting the least; and the employment effects were limited.
CitationBenzarti, Youssef, and Dorian Carloni. 2019. "Who Really Benefits from Consumption Tax Cuts? Evidence from a Large VAT Reform in France." American Economic Journal: Economic Policy, 11 (1): 38-63. DOI: 10.1257/pol.20170504
- H22 Taxation and Subsidies: Incidence
- H25 Business Taxes and Subsidies including sales and value-added (VAT)
- L83 Sports; Gambling; Restaurants; Recreation; Tourism
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