NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Who Really Benefits from Consumption Tax Cuts? Evidence from a Large VAT Reform in France.

Youssef Benzarti, Dorian Carloni

NBER Working Paper No. 23848
Issued in September 2017
NBER Program(s):PE

In this paper we evaluate the incidence of a large cut in value-added taxes (VAT) for French sit-down restaurants. In contrast to previous studies that focus on prices only, we estimate its effect on four groups: workers, firm owners, consumers and suppliers of material goods. Using a difference-in-differences strategy on firm-level data we find that: (1) the effect on consumers was limited, (2) employees and sellers of material goods shared 25 and 16 percent of the total benefit, and (3) the reform mostly benefited owners of sit-down restaurants, who pocketed 41 percent of the tax cut.

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Document Object Identifier (DOI): 10.3386/w23848

 
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