IS REDISTRIBUTION THROUGH INDIRECT TAXES EQUITABLE

A move towards a non-uniform indirect tax structure may result in some vertical redistribution. It will also lead to a different treatment o f households with the same total expenditures but with different prefe rences. To evaluate the social desirability of such rate differentiati on we introduce a distinction between needs (for which individuals are not responsible) and tastes (for which they are). Vile show some empi rical results for Belgium, obtained with the microsimulation program A STER. In these calculations we compare the actual Belgian system of in direct taxes with a simpler structure with only two rates. (C) 1997 El sevier Science B.V.