European economic review vol:41 issue:3-5 pages:599-608
A move towards a non-uniform indirect tax structure may result in some vertical redistribution. It will also lead to a different treatment of households with the same total expenditures but with different preferences. To evaluate the social desirability of such rate differentiation we introduce a distinction between needs (for which individuals are not responsible) and tastes (for which they are). Vile show some empirical results for Belgium, obtained with the microsimulation program ASTER. In these calculations we compare the actual Belgian system of indirect taxes with a simpler structure with only two rates. (C) 1997 Elsevier Science B.V.