The Method for Evaluation of Consumption Tax Regressivity

Abstract

Tax policy, tax progressivity, and income redistribution from higher to lower income earnings are effec-tive economic measures for reducing inequality. The aim of the paper is to elaborate principles of measurement of consumption tax impact on income inequality or level of consumption tax regressivity. The objectives are to compare methods for evaluation of income and consumption tax impact to income inequality and to find the possible solutions how to measure consumption tax impact to income inequality. As result was developed a specially designed method which can be used for evaluation of consumption tax impact to income inequality, as well as an appropriate measure-ment is recommended.