Tax and Benefit Policies in the Enlarged Europe

This book offers the first systematic assessment of income redistribution in Eastern Europe, within a comparative European perspective, and it demonstrates the future research potential of microsimulation techniques in this region. The book's chapters are based on a unique instrument -- EUROMOD: the European tax-benefit microsimulation model, which has been enlarged to include Estonia, Hungary, Poland, Slovenia and other countries. Tax-benefit models such as EUROMOD are computer programmes based on household micro-data, which calculate each household's disposable income. Microsimulation can be used to evaluate the impact of current taxes and benefit policies on individuals' incomes and work incentives. In addition, the model is designed to answer 'what if' questions about different policy reforms, allowing the potential effects of proposed changes to be studied before their actual implementation. EUROMOD goes one step further in the process of helping policy design, in allowing international comparisons between EU countries. This book offers an important demonstration of the effectiveness of tax-benefit models in presenting complex information in a concise and comprehensible way. It discusses what the barriers to their adoption to date have been and it looks at the possibilities EUROMOD offers to future policy-making in Europe.

Orsolya Lelkes is an Economic Policy Analyst and Research Fellow at the European Centre for Social Welfare Policy and Research. She is also a research affiliate at the Centre for Analysis of Social Exclusion (CASE) at the London School of Economics. From 2002 to 2005 she was the head of the Economics Research Unit at the Ministry of Finance in Hungary and the national representative at the Council of Europe Economic Policy Committee in Brussels. Holly Sutherland is a Research Professor at ISER, University of Essex. She has 25 years experience in designing, building and using tax-benefit models. She has published widely in economics and social policy journals and she is the co- author (with G. Redmond and M. Wilson) of The Arithmetic of Tax and Social Security Reform and the co- editor (with L. Mitton and M. Weeks) of Microsimulation Modelling for Policy Analysis: Challenges and Innovations.

Contents: Introduction, Orsolya Lelkes and Holly Sutherland; Part I Setting the Scene: An enlarged role for tax benefit models, Sir Anthony B. Atkinson; EUROMOD: past, present and future, Holly Sutherland. Part II Comparative Analyses Using the Enlarged EUROMOD: The effects of taxes and benefits on income distribution in the enlarged EU, Alari Paulus, Mitja Cok, Francesco Figari, Péter HegedÃ-s, Silja Kralik, NataÅ¡a Kump, Orsolya Lelkes, Horacio Levy, Christine Lietz, Daniela Mantovani, Leszek Morawski, Holly Sutherland, Péter Szivós and Andres Võrk; Flat tax reform in Eastern Europe: a comparative analysis of alternative scenarios in Estonia, Hungary and Slovenia, using EUROMOD, Alari Paulus, Orsolya Lelkes, Mitja Cok, NataÅ¡a Kump, Péter HegedÃ-s Andres Võrk, Péter Szivós and Silja Kralik; Alternative tax-benefit strategies to support children in Poland, Horacio Levy, Leszek Morawski and Michal Myck. Part III Evidence Based on Emerging National Models: Reforming child allowances in Lithuania: what does microsimulation tell us?, Lina Salanauskaite and Gerlinde Verbist; Tax-free income vs. in-work tax allowances: effects on labour market participation in Cyprus, Panos Pashardes and Alexandros Polycarpou; Looking ahead: what priorities for tax-benefit modelling?, Herwig Immervoll and Orsolya Lelkes.