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Is a Tax Cut on Cultural Goods Consumption Actually Desirable? A Microsimulation Analysis applied to Spain *
Author(s) -
PrietoRodriguez Juan,
RomeroJordán Desiderio,
SanzSanz José Felix
Publication year - 2005
Publication title -
fiscal studies
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.63
H-Index - 40
eISSN - 1475-5890
pISSN - 0143-5671
DOI - 10.1111/j.1475-5890.2005.00023.x
Subject(s) - economics , microsimulation , welfare , consumption (sociology) , revenue , almost ideal demand system , public economics , consumption tax , indirect tax , macroeconomics , tax reform , microeconomics , production (economics) , market economy , finance , sociology , engineering , social science , transport engineering
Proposals for tax cuts on cultural goods represent an ongoing debate in cultural policy. The main aim of this paper is to shed some light on this debate using microsimulation tools. First, we have estimated an Almost Ideal Demand System for 19 different groups of goods, including cultural goods. Expenditure and price elasticities have been obtained from this model. Using this information, three alternative cuts in the VAT rate on cultural goods have been microsimulated and evaluated in terms of revenue and welfare. These types of fiscal reforms will lead to welfare and efficiency gains that can be described as regressive.