Modelling tax impact

Output Track A3

Working papers A3a1

> Hoebeeck, A., Stieperaere, H., Smolders, C., Inghelbrecht,K., Everaert,G., A3a1: Elasticiteitsmodellen en combination forecasts ter voorspelling van de ontvangsten van de registratierechten, Hogeschool Gent, februari 2013, 39 pp. (.pdf)

Working papers A3b1

> DECOSTER, A., DE SWERDT, K., B1: FANTASI: Een microsimulatiemodel voor personenbelasting op de IPCAL-data, KULeuven, 2012, 56 pp. (.pdf)

Final reports A3a2

> FRANCKX, L., MICHIELS, H., A3a2: Impact hervorming Verkeersbelasting. Wat drijft gezinnen in hun autokeuze? Een continu-discreet model op gezinsniveau, VITO, 2014, 97 pp. (.pdf)

> MAYERES, I., VANHULSEL, M., A3a2: Impact hervorming Verkeersbelasting. Simulatiemodel voor de hervorming van de verkeersbelastingen, VITO, 2014, 40 pp. (.pdf)

Track A3a1

a1. Forecasting models for the inheritance tax, the gift taxes and the stamp duties revenues

Research theme

This 2-year project continues the research done on the subject by the SFB during the period 2006-2011. In the previous study the underlying components of the revenues of the stamp duties and the inheritance and gift taxes were estimated. In this follow-up study additional forecasting models for the actual stamp duty revenues will be tested. In addition to the AR- and ADL- models, the performance of combination-forecasts will be evaluated as well as forecasts that allow better to take into account the heterogeneity of the housing market. Finally the forecasting methods implemented by other fiscal administrations will be examined.

Promotors: C. Smolders & G. Everaert & K. Ingelbrecht
Scientific personnel: Hannes Stieperaere

Track A3a2

a2. Modelling the effects of the traffic tax reform

Research theme

This research focuses on the planned reform of the traffic taxes which aims to increase sustainability. The research will be set up, in consultation with the principal, in order to integrate the recent reform propositions in the simulations. For hybrid and electrical cars, the available insights will be summarized in a literature study. This project will be finalized in 2013.

Based on the exploration of the available data it was decided in 2012 to adopt 2 approaches, both of which will be developed. In both cases the NLOGIT software is used for the econometrical analysis. In addition we will also explore how to extend the analysis in case better data would become available.

Promotor: I. Mayeres

Track A3b1

b1. Micro simulation models: income tax

Research theme

The aim of this project is:
A. to develop a static micro simulation model (MSM) for the personal income tax to analyze the budgetary and distributional impact of parametric changes in regionalized personal income taxes.
B. Linking this model and the previously developed FLEMOSI-models to the budget model of track A4.

MSM-models result from micro-data collected for representative random surveys or panels of fiscal data. An MSM implies subsequently that the tax legislation is programmed. Policy changes can be inserted in the program and the effects of this on the income of a family can be calculated using panel data. This project focuses on the income tax. The project extends the results from an ongoing IWT-project that aims to develop an MSM for Flanders by 2014 (= MEFISTO). In this project we work with the IPCAL –data, set available by the federal department of Finance.

In phase 1 (2012) the researcher will validate the model and develop a user-interface for applications using the IPCAL-data. In the second phase (2013) the simulations will be executed and an extensive description of the distribution of the tax expenses is generated. In addition a descriptive analysis of the effective average and marginal tax rates will be made available. In 2013 the project will try to offer explanations for the regional differences in taxable income in the SILC-survey. The model will be extended with scenarios such as split rates, surcharge taxes on the federal income tax and specific Flemish tax deductions that will become part of the Region's taxing powers as a result of the 6th State Reform (e.g. deductions for energy saving renovations, tax rebates related to participation on the labor market,…). Both the distributional and budgetary first round impact of the reforms in these areas will be simulated. During the period 2014-2015 research activities will concentrate on linking this and the FLEMOSI-model with the budgetary model of track A4.

Promotors: A. Decoster en S. Proost
Scientific personnel: Kris De Swerdt - Pieter Vanleenhove - Tom Vanheukelom

Track A3b2

b2. Micro simulation models: inheritance tax

Research theme

This research proposal focuses on the effects of inheritance taxes.

The research questions addressed are the following:

• What are the motives behind bequests?
• What are the average and marginal rates paid by specified groups of taxpayers?
• What is the effect of taxes on bequests?
• How would reforms affect revenues?

In this study we plan to increase the knowledge concerning bequests, motives and effects from inheritance tax reforms in the following ways:

1. Desk research resulting in a literature review concerning the nature of bequests, the underlying motives and elasticities

2. Concerning bequest profiles: with the consent of the government, a representative panel of tax payers should be sampled from administrative files at different points in time.These should allow to calculate the tax burden for different profiles of tax payers (e.g. families with and without children/ homeowners versus renters/ different age groups/…). In addition, this would give the opportunity to look at changes over time in the tax base, resulting from changes in the stock market, the housing market and the business cycles.

3. Concerning bequest motives: empirical analyses shall be based on the first and second wave of the Survey of Health, Ageing and Retirement in Europe (SHARE) (Borsch-Supan, & Winter,2001). This is a longitudinal, multidisciplinary and cross-national survey representing the population of individuals aged 50 and over in Europe. SHARE contains detailed information on social support and intergenerational financial transfers. For this project we will explore household data from SHARE for Flemish families to learn about the intention to bequest and the motives behind this process. The SHARE data contains 3827 respondents of which 2587 are situated in the Flemish region. For 428 respondents data were collected concerning the motives behind wealth transfers. These can be related to income, wealth,education, age, health status, family status.Given the different waves, changes in motives can be studied in addition.

4. Simulate the effects of reform proposals: The panel of micro data from administrative data allows us to simulate the effects on revenues of reform proposals in a more reliable way. In order to take into account potential behavioral effects, elasticities will be used from the literature. In addition, we will investigate whether panel data from the PBHS of SILC can give an indication of these elasticities, through comparison of behavior of Belgian tax payers from different regions with different inheritance tax levels.

Promotors: C. Smolders & B. De Groote
Scientific personnel: Elke Vandorpe