Expenditure imputation and microsimulation of VAT

In this paper, we document the development process of the microsimulation model for the analysis of the indirect value-added tax liabilities of households in Slovakia. This simulation module can be directly integrated into the framework of SIMTASK, the Slovak microsimulation model of income taxes, health and social security contributions and transfers. In the first step, a combined micro-level dataset that integrates information on disposable income and expenditures of Slovak households has been created. Households’ expenditures reported in HBS dataset have been imputed to SK-SILC dataset by estimating parametric Engel curves. Validation of the imputation procedure of households’ consumption and simulation of VAT has been discussed.

Keywords: value added tax, tax and transfer system, income distribution, microsimulation

JEL classification: C81, D12, D31, H31

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