Redistributive effects of the shift from personal income taxes to indirecttaxes: Belgium 1988-93

Between 1988 and 1993, the Belgian personal income tax system and the indir ect tax system were reformed to a considerable extent. We use microsimulati on models to investigate the impact of the reform on the liability progress ion and the redistributive effect of the combined tax system. The redistrib utive effect of personal income taxes decreased, notwithstanding an increas e in liability progression. For indirect taxes, both the liability regressi vity and the reverse redistributive effect have been enhanced. We use recen tly developed statistical tests to gauge the significance of the observed c hanges.