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The Tax Burden CGE Analysis for Slovakia and Slovenia

Veronika Mitkova, Miroslava Jánošová

Abstract


In the paper, the static computable general equilibrium model for Slovakia and
Slovenia is used for a tax burden analysis. There was considered simultaneous
1% increase in taxes on primary factors, on firms’ and government domestic
and imported purchases, on import taxes, on output (or income) tax, on private
domestic and imported consumption taxes and export subsidies. The direct tax
burden as well as the allocative efficiency effects of a tax, the welfare effects
and welfare decomposition of such change for both countries is analysed.
The most sensitive sectors on tax rate changes is heavy manufacturing and
processed food and the most distorting effect has the tax increase on private
consumption tax. The government’s tax increase should generate return at least
105.75% of its costs in Slovakia and 101.92% in Slovenia, otherwise the welfare
will decline.


Keywords


tax burden, welfare analysis, CGE model

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