Shifting the tax burden from labor to consumption is proposed in many developed INTRODUCTIONIndirect taxation forms part of a mix of different tax and revenue-raising instruments including taxes on income, property, and social security levies on employment income that households and other economic agents face. As Table 1 illustrates for the OECD, indirect or consumption taxation is a substantial component in the tax system of most industrialized countries. Despite a decline in relative importance mainly taking place during the '70s, the total share of government revenue raised via consumption seems to have stabilized at around 30 percent, 1 which still is substantially more than, for instance, the income tax. Note that this stabilization since 1980 hides two distinct evolutions partly offsetting one another: the implosion of taxes on special goods and services (excise taxes 2 ) from 1960 onward and the rise of taxes on general consumption (mainly VAT and sales taxes) in the same period. Lacking an adequate political economy model of tax system formation, it is difficult to give a conclusive interpretation of these opposite evolutions. Theoretically there are (productive efficiency) arguments contra and (externality) We only consider relative trends in this paper. In absolute terms there is evidence of a correlation between the share of tax raised by VAT and the overall tax burden in a country (Keen & Lockwood, 2006). 2 It should be noted that import duties also belong to this category, suggesting that the promotion of free trade might be responsible for the decreasing influence of this revenue type. Detailed figures, such as in OECD (2008a), show nevertheless that (1) the share of import duties is too small to provoke an effect of this magnitude and that (2) for the more restricted category of excise duties without import duties the evolution is analogous.

In this paper, we survey the use of nowcasting methods in Microsimulation models. These nowcasting methods differ in a number of respects to the more established methods of forecasting. The main distinction is that while forecasting extrapolates from current data to estimate the future, the methods of nowcasting extrapolate from data of the recent past to reflect the present situation. In this paper, we undertake a survey of a number of modelling teams globally, selected for their experience and breadth of use with the methodologies of nowcasting and to ascertain the modelling choices made. Different methodologies are used to adjust the different components, with indexation or price uprating applied for the adjustments to growth in wages or prices, the updating of tax-benefit policy to adjust for policy change and either static or dynamic ageing to account for changes to the population and labour market structure. Our survey reports some of the choices made. We find that these model teams are increasingly utilising variants of these methods for short-term projections, which is relatively novel relative to the published literature.

Agricultural income volatility has become a major hurdle for Irish farmers and policymakers to overcome in their drive to increase investment, production and ultimately income in the sector. This paper studies data from 927 farms in the Teagasc National Farm Survey between 2005 and 2013, the first 9 years of the decoupled subsidy era. The primary income support for European farmers, the single farm payment (SFP), is analysed in the context of its relationship with market income risk, i.e. farm income excluding subsidies. Detrended measures of market income variability are regressed on a large set of control variables. The findings suggest that the amount of SFP received by farmers has a strong and statistically significant relationship with agricultural income volatility.

The goal of this paper is to simulate a tax shift from labour to consumption and perform a distributional analysis of the reform. Microsimulation programs are often uniquely focussed on the personal income tax system and on social security contributions and benefits. However, against a political background where income taxes are under increased pressure and alternative, less distortive forms of taxation come under consideration, microsimulation models enriched with expenditure data and consumption tax structures could play an important role in sharpening the (distributional) picture of such systemic changes. The current paper discusses an algorithm for this enrichment-mainly with VAT, excises and other consumption taxes-within the context of the EUROMOD-framework and applies the obtained program to the simulation of a decrease of social security contributions compensated by a rise in standard VAT rate to maintain government budget neutrality for four EU countries. The measure is found to have a (first order) regressive effect, pointing to the fact that keeping redistribution constant would require the remaining post-reform income taxation to become more progressive.

Purpose The purpose of this paper is to identify the potential relationship between farm income variability and off-farm employment decisions in the short and medium term for the case of Irish farm operators. Design/methodology/approach Panel probit models of off-farm labour supply are estimated using Teagasc National Farm Survey data for Irish farms. The framework is based largely on standard expected utility but includes a constraint for recent employment history. Findings The analyses identifies some evidence of a positive association between farm income variability and off-farm employment in the medium term but no significant relationship in the short term. This suggests that off-farm employment is part of a wider portfolio decision but is not a strong solution to short-term farm income shocks. Practical implications European farmers increasingly face high income variability but financial risk management tools are not sufficiently developed or widely accessible to assist farmers in managing the associated risk. This deficiency can have negative implications for household economic welfare and future farm investments and hence the future farm income. Off-farm employment can form part of a wider medium-term portfolio strategy but more effective tools are also required for risk management particularly in dealing with short-term volatility and where off-farm employment is not a realistic endeavour given time constraints and/or demographics. Originality/value The estimation of farm income variability includes a detrending method thus reducing the likelihood of overestimating farm income variability for farms in deliberate expansion or decline. While previous research has typically focused on the short-term response of farmers to historical farm income variability, this research has distinguished between the short and medium term.