Overview
The tool Consumption Taxes of EUROMOD, expands the capabilities of EUROMOD simulations by enabling the simulation of consumption taxes.
To simulate Consumption taxes liabilities, the CT combines the underlying microdata of EUROMOD with household expenditure information for around 200 commodity categories from Household Budget Surveys.
Research
Starting from the household disposable income simulated by EUROMOD, the CT applies the consumption taxation rules in place in each country to simulate Post CT disposable income, i.e.:
- income after direct taxes,
- cash benefits,
- consumption taxation.
Hence, the CT enables researchers to model and analyse the redistributive and budgetary impact of changes in:
- consumption tax rates,
- tax exemptions,
- broader price-side policies (e.g., price caps).
Through this tool, policymakers and researchers can better understand how changes in consumption taxes may affect households' income levels and inequality, aiding evidence-based decision-making, and policy design.