Up and down the value-added tax asymmetric incidence of a large VAT reform in Portugal

• Autor(a) principal: Sousa, Pedro Manuel Tavares de
• Data de Publicação: 2020
• Tipo de documento: Dissertação
• Idioma: eng
• Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
• Texto Completo: http://hdl.handle.net/10362/105447
• topic: Value-Added Tax; VAT; Restaurants; Portugal; Fiscal Policy; Difference-in-Differences; Consumption Taxes; Domínio/Área Científica::Ciências Sociais::Economia e Gestão

This paper assesses the incidence of a large and temporary increase in value-added taxfor Portuguese restaurants and other catering services. In 2012 the tax increased from 13%to 23% and it was brought back down in July of 2016. Combining data on all non-financialfirms in Portugal between 2006 and 2017 we estimate effects upon four agents: workers,firm-owners, suppliers and consumers. Through a Difference-in-Differences strategy wefind that: the tax increase did not harm employees as severely as firm’s margins, leadingemployers to later pocket most of the tax cut benefits. Also, firm-owners pass onto con-sumers around 40% of the VAT increase while the pass-through after the repeal is zero.