Michael Christl, Andrea Papini, Alberto Tumino

Open access

Who Pays More? Heterogeneity in Effective VAT Rates Across Native and Migrant Households

  • Abstract

Informations and abstract

Keywords: VAT, redistribution, migration

This paper contributes to the literature on the distributional properties of VAT, analysing who bears higher VAT payments between native and migrant households in France, Germany and Spain. The question is of interest from both a distributional and fiscal perspective, in keeping with the ongoing debate of the net fiscal impact of immigration. Using data from the 2010 EU HBS and a simple VAT calculator, we show the existence of gaps in effective VAT rates between native and migrant households in France and in Spain, while no significant gap is observed in Germany. Our results also highlight substantial heterogeneity in effective VAT rates across regions and the degree of urbanisation, confirming the existing evidence on the regressivity of VAT with respect to income. These findings suggest that the consequences for fairness of VAT reforms should be carefully assessed and advocate for the importance of considering indirect taxation when assessing the fiscal cost of migration

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