Social VAT: Good or Bad Idea? (La TVA Sociale: Bonne ou Mauvaise Idée?) (French)

31 Pages Posted: 25 Jun 2010

See all articles by Patrick Fève

Patrick Fève

University of Toulouse 1 - Toulouse School of Economics (TSE)

Julien Matheron

Banque de France

Jean-Guillaume Sahuc

Banque de France; Université Paris Ouest - Nanterre, La Défense - EconomiX

Date Written: August 1, 2009

Abstract

The quantitative and dynamic consequence of a social VAT reform, i.e. a fiscal reform consisting in substituting VAT for social contributions, is assessed using two general equilibrium models. The first one is a Walrasian model with no other frictions than distortionary taxation of labor and capital incomes and consumption. The second one introduces in addition matching frictions in the labor market. Two alternative financing schemes are considered for the practical details of implementing the social VAT. In all cases, the fiscal reform turns out to generate a small, positive long-run effect on aggregate variables and yields a modest welfare gain. In the no-friction model, this welfare gain is substantially reduced when the reform is pre-announced six quarters prior to implementation. The effect of such a pre-announced reform are smaller when labor market frictions are taken into account.

Note: downloadable document is in French

Keywords: Social VAT, DGE, Pre-Announced Fiscal Reform

JEL Classification: E10, E20, G12

Suggested Citation

Feve, Patrick and Matheron, Julien and Sahuc, Jean-Guillaume, Social VAT: Good or Bad Idea? (La TVA Sociale: Bonne ou Mauvaise Idée?) (French) (August 1, 2009). Banque de France Working Paper No. 244, Available at SSRN: https://ssrn.com/abstract=1630398 or http://dx.doi.org/10.2139/ssrn.1630398

Patrick Feve (Contact Author)

University of Toulouse 1 - Toulouse School of Economics (TSE) ( email )

Place Anatole-France
Toulouse Cedex, F-31042
France

Julien Matheron

Banque de France ( email )

Paris
France

Jean-Guillaume Sahuc

Banque de France ( email )

31 rue Croix des Petits Champs
75049 Paris Cedex 01
France
+33 1 42 92-49-52 (Phone)
+33 1 42-92-62-92 (Fax)

HOME PAGE: http:// https://sites.google.com/site/sahuceconomics/

Université Paris Ouest - Nanterre, La Défense - EconomiX ( email )

200 Avenue de la République
Nanterre cedex, Nanterre Cedex 92000
France

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