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Michael Christl, Joint Research Centre of the European Commission

Redistribution within the tax-benefits system in Austria
 
Tuesday, November 10th, 15:00-16:00 (CEST)

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Abstract
 
This study analyzes redistribution within the Austrian tax-benefit system. We take a comprehensive view and include not only direct taxation and cash benefits but also indirect taxes and in-kind transfers. We look at two kinds of redistribution: between households belonging to different income groups, and between generations, taking a life-cycle perspective.
We find that the inequality-enhancing effect of indirect taxes is more than offset by the inequality-reducing effect of in-kind benefits. The Gini coefficient increases from 0.24 to 0.26 due to indirect taxes, but when adding in-kind benefits, it is reduced to 0.23. The overall effect of both indirect taxes and in-kind benefits is therefore progressive. When looking at the impact of indirect taxes and in-kind benefits by generations, we find substantial redistribution in the current system. Our analysis highlights the importance of considering both indirect taxation and in-kind benefits, in a comprehensive analysis of the welfare state. Since in-kind benefits and indirect taxes can vary substantially across countries, both might have a substantial impact on cross-country comparisons of the redistributional impact of welfare states.

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