engleski

Distributional Effects of VAT in Central and Eastern Europe: The Case of Croatia

The characteristic of VAT relavant for the distributional effects of Croatia and CEE economies are analyzed. They support the expectations of higher regressivity of Croatian 1998 VAT. The empirical research for 1998 confirms the regressivity. Furthermore, four simulations of the reduced rate introduction for typical "essencial products" also confirm that the reduced rate could be used to mitigate and even neutralize the regressivity, leadind to a proportional impact of VAT, but that the considerable progressive effect could not be achieved. The possible positive influance on the personal consumption structure (the decrease of share for food) is presented too.

VAT ; tax rates ; consumption ; Central and Eastern Europe

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