The reduced rate of VAT in Luxembourg : Does it help the poor?
Keiffer, Max
Promotor(s) : Jousten, Alain
Date of defense : 19-Jun-2017/30-Jun-2017 • Permalink : http://hdl.handle.net/2268.2/2686
Details
Title : | The reduced rate of VAT in Luxembourg : Does it help the poor? |
Author : | Keiffer, Max |
Date of defense : | 19-Jun-2017/30-Jun-2017 |
Advisor(s) : | Jousten, Alain |
Committee's member(s) : | Jurion, Bernard
Flawinne, Xavier |
Language : | English |
Discipline(s) : | Business & economic sciences > Economic systems & public economics |
Institution(s) : | Université de Liège, Liège, Belgique |
Degree: | Master en sciences économiques, orientation générale, à finalité spécialisée en Economic Analysis and Public Governance |
Faculty: | Master thesis of the HEC-Ecole de gestion de l'Université de Liège |
Abstract
[en] The thesis analyzes the distributional effect of the reduced VAT rate in Luxembourg on the poor. Its hypothesis states that the use of differentiation in the VAT structure in order to pursue distributional objectives is less effective in Luxembourg due to the well-developed social security and direct tax system. The results of the empirical analysis show that, despite the correct allocating of the reduced VAT rates on the specific goods to help the poor, the small regressivity of the VAT, the decreasing differences in the relative spending on reduced rated goods and the disproportional cost benefit for the rich make the reduced VAT rate less efficient to improve equity. The overall conclusion is as follow: The current VAT system in Luxembourg is primarily a source of income that finances partially the social welfare system. As a result it could help, if at all, the poor only indirectly.
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