A birdÂ’’s eye view on 20 years of tax-benefit reforms in Belgium

André Decoster, Sergio Perelman, Dieter Vandelannoote, Toon Vanheukelom and Gerlinde Verbist

No 1502, Working Papers from Herman Deleeck Centre for Social Policy, University of Antwerp

Abstract: Belgium has seen major changes in its tax-benefit system over the past twenty years. These changes have, to a large extent, co-determined the evolution of disposable incomes of Belgian households on one hand, and their incentives to work on the other. In this paper we assess equity and efficiency aspects of changes in tax-benefit policies over the full course of 1992-2012. By simulating effects of current and past tax-benefit policies using the microsimulation model MEFISTO-EUROMOD, we summarize the shifts in policy orientation over this period using two summary measures of redistribution and work incentives. Our three main findings are: 1) the changes in the tax-benefit system have to a large extent been pro-poor and redistribution has been increased; 2) the introduction of an earned income tax credit and the lowering of personal income taxes has contributed to improve work incentives, but this effect was partially eroded by an increase in unemployment benefits since 2000; 3) the results crucially depend on whether one chooses as ‘no policy change’ counterfactual indexation with inflation or indexation with nominal wage growth.

Keywords: labour supply; marginal cost of public funds; microsimulation; redistribution; tax-benefit system; taxation (search for similar items in EconPapers)
JEL-codes: H21 H41 J20 (search for similar items in EconPapers)
Date: 2015-04
New Economics Papers: this item is included in nep-acc, nep-pbe and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:hdl:wpaper:1502

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