1. Consumption, savings and wealth
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The distributional impact of VAT reduction for food in Hungary: Results from a Hungarian microsimulation model

  1. Cathal O’Donoghue  Is a corresponding author
  2. Jinjing Li  Is a corresponding author
  3. Ilona Cserháti  Is a corresponding author
  4. Péter Elek  Is a corresponding author
  5. Tibor Keresztély  Is a corresponding author
  6. Tibor Takács  Is a corresponding author
  1. National University of Ireland, Ireland
  2. University of Canberra, Australia
  3. Corvinus University of Budapest, Hungary
  4. Hungarian Academy of Sciences, Hungary
Research article
Volume 11(3) Winter 2018
Cite this article as: C. O’Donoghue, J. Li, I. Cserháti, P. Elek, T. Keresztély, T. Takács; 2018; The distributional impact of VAT reduction for food in Hungary: Results from a Hungarian microsimulation model; International Journal of Microsimulation; 11(3); 2-38. doi: 10.34196/ijm.00187
5 figures and 9 tables

Figures

Figure 1
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Standard VAT rates in the OECD countries (%).

Source: OECD, 2014.

Figure 2
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Change in VAT payments as a result of food VAT reduction by household income decile (decile 1 with the lowest income).

Source: Authors’ calculations with the ECONS-TAX microsimulation model.

Figure 3
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Mean and 10% and 90% quantiles of the change in VAT payments by household income decile (decile 1 with the lowest income).

Source: Authors’ calculations with the ECONS-TAX microsimulation model.

Figure 4
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Pre- and post-reform VAT burdens by household income decile (decile 1 with the lowest income).

Source: Authors’ calculations with the ECONS-TAX microsimulation model.

Figure A.1
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Dynamic labour market module.

Source: Own construction.

Tables

Table 1
Average product shares, expenditure elasticities and own price elasticities for product categories.
Expenditure elasticity Own price elasticity
Product share (ηi) (ηii)
Food and non-alcoholic beverages 0.226 0.77 −0.48
Alcoholic beverages 0.009 (1.09) (−0.55)
Tobacco 0.023 (0.58) (−0.30)
Clothing and footwear 0.042 (1.31) (−0.68)
Water, electricity, gas and other fuels 0.201 0.37 −0.24
Rents 0.011 1.64 −0.83
Household services 0.097 0.79 −0.44
Health 0.055 1.02 −0.53
Private transport 0.055 1.05 −0.56
Public transport 0.016 1.35 −0.68
Communications 0.066 0.78 −0.42
Recreation and culture 0.047 1.30 −0.67
Education 0.006 (1.59) (−0.80)
Restaurants and hotels 0.030 (1.69) (−0.86)
Other goods and services 0.060 1.61 −0.83
Durable goods 0.056 (1.79) (−0.91)

  1. Source: Authors’ calculations based on HKÉF for 2011.

  2. Notes: Parentheses indicate product categories for which the expenditure parameter estimates were not significant in the consumption equations (Table B.1 in the Appendix) so they cannot be measured reliably.

Table 2
A summary of the VAT rate change in the examined scenario.
Product category VAT current VAT in the scenario
Food (Tier 1) 18% 0%
Food (Tier 2) 27% 5%
Other goods (Tier 1) 18% 18%
Other goods (Tier 2) 27% 27%

  1. Source: Operative law on VAT in Hungary.

Table 3
Changes in real consumption by product categories as a result of the reduction of food VAT rate.
Product category Change in real consumption (%)
Food and non-alcoholic beverages 9.0%
Alcoholic beverages 2.7%
Tobacco 2.0%
Clothing and footwear 2.8%
Water, electricity, gas and other fuels 1.4%
Rents 2.8%
Household services 2.1%
Health 2.5%
Private transport 2.2%
Public transport 2.8%
Communications 2.0%
Recreation and culture 2.7%
Education 2.5%
Restaurants and hotels 2.6%
Other goods and services 2.4%
Durable consumption goods 2.8%

  1. Source: Authors’ calculations with the ECONS-TAX microsimulation model.

Table 4
Changes in VAT payment by decile using different country-level constant Frisch parameters.
Static scenario Behavioural scenarios
−1/ξ 0.25 0.4 0.5 0.6 0.75
ξ −4.0 −2.5 −2.0 −1.67 −1.33
Food price elasticity −0.32 −0.41 −0.48 −0.55 −0.65
Income Decile Change in VAT payment (thousand HUF)
1 −57.3 −50.3 −51.1 −51.6 −52.2 −53.0
2 −55.1 −48.8 −49.5 −50.0 −50.5 −51.2
3 −54.8 −48.6 −49.3 −49.8 −50.3 −51.0
4 −60.0 −53.5 −54.2 −54.7 −55.2 −56.0
5 −64.8 −57.8 −58.6 −59.1 −59.6 −60.5
6 −67.3 −59.9 −60.7 −61.3 −61.8 −62.7
7 −75.2 −66.8 −67.7 −68.4 −69.0 −70.0
8 −79.1 −70.0 −71.0 −71.7 −72.4 −73.4
9 −85.3 −75.7 −76.7 −77.5 −78.2 −79.3
10 −98.2 −86.7 −88.0 −88.8 −89.7 −91.0
Total −69.7 −61.8 −62.7 −63.3 −63.9 −64.8

  1. Source: Authors’ calculations with the ECONS-TAX microsimulation model.

Table 5
Changes in VAT payment by decile using different household-specific Frisch parameters.
Average value of −1/ξ 0.5 0.5 0.5
Income semi-elasticity of −1/ξ 0.00 0.10 0.20
Average food price elasticity −0.48 −0.48 −0.48
5% quantile of food price elasticity −0.48 −0.54 −0.61
95% quantile of food price elasticity −0.48 −0.42 −0.36
Income Decile Change in VAT payment (thousand HUF)
1 −51.6 −52.0 −51.7
2 −50.0 −49.8 −49.6
3 −49.8 −49.7 −49.5
4 −54.7 −54.7 −54.6
5 −59.1 −59.1 −59.1
6 −61.3 −61.4 −61.4
7 −68.4 −68.5 −68.7
8 −71.7 −72.0 −72.3
9 −77.5 −77.9 −78.4
10 −88.8 −89.9 −90.9
Total −63.3 −63.5 −63.6

  1. Source: Authors’ calculations with the ECONS-TAX microsimulation.

Table B.1
Parameter estimates of the expenditure share equations.
Share of product category Av. of variable Food and non-alc. beverages Alcoholic beverages Tobacco Clothing and footwear Water and energy Rents Household services Health
Log expenditure 14.3 0.300*** −0.0152 −0.0287 0.0562* −0.255*** 0.101*** 0.153*** 0.0996***
(0.536) (0.0519) (0.0135) (0.0236) (0.0297) (0.0536) (0.0188) (0.0338) (0.0342)
Log expenditure squared 206.0 −0.0119*** 0.000552 0.000701 −0.00150 0.00513*** −0.00318*** −0.00589*** −0.00340***
(15.4) (0.00178) (0.000459) (0.000803) (0.00104) (0.00184) (0.000640) (0.00116) (0.00117)
Household type (baseline = no retired person, no couple, no child in the household) (average = 0.179, standard deviation = 0.383 for baseline variable)
Retired: no; couple: no; child: yes 0.032 0.0132** −0.00457*** −0.00422** 0.00959*** 0.0167*** −0.00896** 0.00197 −0.00683***
(0.176) (0.00603) (0.000761) (0.00204) (0.00283) (0.00464) (0.00386) (0.00364) (0.00239)
Retired: no; couple: yes; child: no 0.201 0.0338*** −0.00107 −1.58e-05 −0.00124 0.0210*** −0.00662*** −0.00494*** 0.00865***
(0.401) (0.00311) (0.000731) (0.00141) (0.00145) (0.00245) (0.00208) (0.00184) (0.00156)
Retired: no; couple: yes; child: yes 0.172 0.0198*** −0.00383*** −0.00205 0.00466* 0.0261*** −0.0128*** −0.00305 0.00972***
(0.377) (0.00509) (0.000867) (0.00196) (0.00243) (0.00356) (0.00312) (0.00263) (0.00203)
Retired: yes; couple: no; child: no 0.210 −0.00967** −0.00137 −0.00111 −0.00346* 0.00610 −0.00950*** −0.00183 0.00970***
(0.408) (0.00461) (0.000984) (0.00157) (0.00179) (0.00380) (0.00203) (0.00298) (0.00323)
Retired: yes; couple: no; child: yes 0.00458 0.0317** −0.00624*** −0.00652 −0.000390 0.0282*** −0.0159*** 0.00924 0.0269***
(0.0675) (0.0136) (0.00157) (0.00426) (0.00516) (0.0105) (0.00531) (0.00994) (0.00670)
Retired: yes; couple: yes; child: no 0.181 0.0159*** −0.000923 0.00106 −0.00380 0.0248*** −0.0136*** −0.0116*** 0.0191***
(0.385) (0.00609) (0.00138) (0.00218) (0.00269) (0.00482) (0.00226) (0.00373) (0.00408)
Retired: yes; couple: yes; child: yes 0.0204 0.0111 −0.00433*** −0.00115 −0.000883 0.0395*** −0.0134*** −0.0132*** 0.0264***
(0.141) (0.00817) (0.00144) (0.00300) (0.00376) (0.00608) (0.00373) (0.00458) (0.00472)
Number of children (0-15 years) 0.370 0.0227*** −0.000507 −0.000336 −0.000577 0.00377** −0.00302** −0.000199 −0.00215***
(0.785) (0.00241) (0.000315) (0.000905) (0.00110) (0.00154) (0.00134) (0.00116) (0.000810)
Number of retired people 0.536 0.0118*** 0.000843 −0.000554 0.000522 0.00372 −0.00103 0.00754*** −0.00186
(0.703) (0.00358) (0.000794) (0.00111) (0.00148) (0.00277) (0.00102) (0.00223) (0.00251)
Number of earners 0.938 0.000274 −0.000421* −0.00128** 0.00492*** 0.00700*** −0.00268*** 0.000789 −0.00824***
(0.949) (0.00136) (0.000231) (0.000553) (0.000605) (0.00101) (0.000608) (0.000731) (0.000676)
Cigarette smoker in the household 0.379 −0.00727*** 0.00273*** 0.0594*** −0.00315*** −0.00654*** 0.00252** −0.00477*** −0.00592***
(0.485) (0.00177) (0.000382) (0.000786) (0.000805) (0.00142) (0.000987) (0.00108) (0.00103)
Car in the household 0.461 −0.0335*** −0.000903** −0.00437*** −0.00244*** 0.000899 −0.0130*** −0.0136*** −0.00825***
(0.498) (0.00202) (0.000389) (0.000705) (0.000928) (0.00153) (0.00114) (0.00122) (0.00116)
Household head
Female 0.472 −0.00450** −0.00449*** −0.00244*** −0.00542*** 0.00663*** −0.00212** 0.00607*** 0.00591***
(0.499) (0.00190) (0.000445) (0.000768) (0.000893) (0.00151) (0.00107) (0.00115) (0.00111)
Standardised age (in 10 years) (standardized to 50 years) 0.483 0.00730*** 0.000656** −0.000905 −0.00515*** 0.00844*** −0.00389*** 0.00295*** 0.00816***
(1.45) (0.00173) (0.000330) (0.000671) (0.000747) (0.00134) (0.00107) (0.000977) (0.000889)
Standardized age squared 2.33 −0.00308*** −0.000185* −0.000984*** 0.000189 −0.00269*** 0.00369*** 0.000274 0.00282***
(2.50) (0.000544) (9.53e-05) (0.000198) (0.000253) (0.000418) (0.000465) (0.000299) (0.000278)
Standardized age on the third power 2.83 −0.000518* −0.000123** 5.58e-05 2.76e-06 −3.97e-05 −0.000912*** −0.000161 0.000943***
(8.08) (0.000298) (5.28e-05) (0.000104) (0.000127) (0.000232) (0.000219) (0.000168) (0.000165)
Level of education of household head (baseline = never attended school) (average = 0.00099, standard deviation = 0.0315 for baseline variable)
Less than 8 classes in primary school 0.0392 −0.0711 0.00135 −0.00153 0.00735* 0.0719*** −0.0248 0.0320* −0.0280
(0.194) (0.0466) (0.00401) (0.0150) (0.00400) (0.0264) (0.0192) (0.0169) (0.0266)
8 to 10 years of primary school 0.198 −0.0864* −7.37e-05 −0.00123 0.00388 0.0680*** −0.0253 0.0395** −0.0216
(0.399) (0.0463) (0.00392) (0.0150) (0.00371) (0.0261) (0.0191) (0.0166) (0.0263)
Lower secondary education 0.321 −0.110** 0.000610 −0.00363 0.000977 0.0688*** −0.0238 0.0520*** −0.0220
(0.467) (0.0462) (0.00392) (0.0150) (0.00370) (0.0261) (0.0191) (0.0166) (0.0263)
Secondary education 0.133 −0.115** 0.00114 −0.00468 0.00356 0.0597** −0.0251 0.0569*** −0.0282
(0.340) (0.0463) (0.00393) (0.0150) (0.00377) (0.0261) (0.0191) (0.0167) (0.0263)
Upper secondary education 0.0778 −0.118** 0.000149 −0.00606 0.00106 0.0598** −0.0210 0.0524*** −0.0281
(0.268) (0.0463) (0.00394) (0.0150) (0.00384) (0.0262) (0.0192) (0.0167) (0.0264)
Post-secondary non-tertiary education 0.0408 −0.117** 0.00307 −0.00555 −0.00266 0.0501* −0.0217 0.0549*** −0.0215
(0.198) (0.0464) (0.00399) (0.0150) (0.00399) (0.0262) (0.0193) (0.0168) (0.0265)
Adult school 0.0122 −0.124*** −0.000219 −0.00888 0.00762 0.0564** −0.0294 0.0619*** −0.0222
(0.110) (0.0466) (0.00404) (0.0151) (0.00544) (0.0266) (0.0194) (0.0173) (0.0266)
College 0.101 −0.124*** 0.00160 −0.00502 0.00719* 0.0535** −0.0238 0.0542*** −0.0245
(0.301) (0.0463) (0.00396) (0.0150) (0.00388) (0.0261) (0.0192) (0.0167) (0.0264)
University 0.0713 −0.128*** 0.00187 −0.00331 0.0136*** 0.0489* −0.0252 0.0542*** −0.0235
(0.257) (0.0463) (0.00396) (0.0150) (0.00410) (0.0261) (0.0192) (0.0167) (0.0264)
PhD 0.00448 −0.127*** 0.000706 −0.00288 0.0154** 0.0441 −0.0321* 0.0547*** −0.0410
(0.0668) (0.0472) (0.00446) (0.0157) (0.00752) (0.0271) (0.0195) (0.0177) (0.0269)
Constant −1.516*** 0.116 0.280 −0.457** 2.714*** −0.739*** −0.923*** −0.659***
(0.382) (0.0985) (0.173) (0.212) (0.391) (0.139) (0.247) (0.251)
Number of observations 10,041 10,041 10,041 10,041 10,041 10,041 10,041 10,041
R-squared 0.200 0.040 0.505 0.188 0.428 0.088 0.108 0.299
Share of product category Private transport Public transport Communication Recreation and culture Education Restaurants and hotels Other Durable goods
Log expenditure 0.205*** 0.160*** 0.248*** 0.0933*** −0.00532 0.0290 −1.174*** 0.0336
(0.0287) (0.0172) (0.0291) (0.0325) (0.0127) (0.0479) (0.134) (0.0974)
Log expenditure squared −0.00703*** −0.00534*** −0.00906*** −0.00268** 0.000331 −7.86e-05 0.0423*** 0.00102
(0.00101) (0.000590) (0.00101) (0.00114) (0.000450) (0.00168) (0.00475) (0.00343)
Household type (baseline = no retired person, no couple, no child in the household)
Retired: no; couple: no; child: yes −0.00637** −0.00250 0.00568** 0.00121 0.00264* −0.0120*** 0.00367 −0.00914
(0.00293) (0.00232) (0.00278) (0.00260) (0.00135) (0.00363) (0.00489) (0.00573)
Retired: no; couple: yes; child: no −0.00254 −0.00435*** 0.00140 −0.00566*** 0.00113 −0.0206*** −0.00556** −0.0135***
(0.00178) (0.00134) (0.00131) (0.00145) (0.000893) (0.00196) (0.00234) (0.00309)
Retired: no; couple: yes; child: yes −0.00556** −0.00637*** 0.00308 −0.00733*** −0.000267 −0.0214*** 0.00179 −0.00253
(0.00279) (0.00191) (0.00210) (0.00218) (0.00105) (0.00274) (0.00394) (0.00486)
Retired: yes; couple: no; child: no 0.00377 −0.00564*** 0.00249 6.94e-06 −0.00136 −0.00132 0.00869** 0.00450
(0.00248) (0.00154) (0.00187) (0.00205) (0.000961) (0.00276) (0.00362) (0.00473)
Retired: yes; couple: no; child: yes −0.00566 1.02e-05 −0.00100 −0.00969** −0.00150 −0.0207*** −0.0151*** −0.0133
(0.00577) (0.00589) (0.00484) (0.00442) (0.00151) (0.00482) (0.00572) (0.0116)
Retired: yes; couple: yes; child: no 0.00645* −0.00342* 0.00627** −0.00929*** −0.000900 −0.0170*** 0.00479 −0.0179***
(0.00371) (0.00203) (0.00259) (0.00275) (0.00136) (0.00356) (0.00487) (0.00639)
Retired: yes; couple: yes; child: yes −0.000977 −0.00413 0.00787** −0.0109*** −0.000602 −0.0222*** −0.00128 −0.0118
(0.00488) (0.00279) (0.00323) (0.00346) (0.00135) (0.00399) (0.00630) (0.00805)
Number of children (0-15 years) −0.00125 −0.00240*** −0.00422*** 9.84e-05 0.000503 −0.00241** −0.00312* −0.00692***
(0.00119) (0.000718) (0.000882) (0.000831) (0.000407) (0.000985) (0.00165) (0.00210)
Number of retired people −0.00486** −0.00183* −0.000995 0.00297* −0.000876 −0.00692*** −0.00490* −0.00358
(0.00206) (0.000972) (0.00143) (0.00158) (0.000622) (0.00187) (0.00265) (0.00364)
Number of earners 0.00131* 0.00497*** 0.00656*** 0.000945* 0.000467 0.00248*** −0.00628*** −0.0108***
(0.000758) (0.000539) (0.000554) (0.000551) (0.000347) (0.000722) (0.00117) (0.00135)
Cigarette smoker in the household −0.00381*** −0.00174** −0.00223*** −0.00738*** −0.000259 −0.00743*** −0.00777*** −0.00634***
(0.000996) (0.000689) (0.000744) (0.000811) (0.000432) (0.00108) (0.00141) (0.00181)
Car in the household 0.0973*** −0.0140*** 0.00187** −0.00558*** −0.000587 −0.0104*** 0.00432** 0.00225
(0.00128) (0.000807) (0.000826) (0.000954) (0.000460) (0.00122) (0.00170) (0.00193)
Household head
Female −0.00601*** 0.00161** 0.00184** −0.000424 0.00152*** −0.00348*** 0.00418*** 0.00111
(0.00110) (0.000715) (0.000789) (0.000893) (0.000483) (0.00123) (0.00149) (0.00197)
Standardised age (in 10 years) −0.000454 −0.000943 −0.00218*** −0.00385*** −0.00106*** −0.00693*** −0.00159 −0.000551
(0.000947) (0.000693) (0.000719) (0.000827) (0.000393) (0.00108) (0.00126) (0.00170)
Standardized age squared −0.000257 −0.000864*** −0.00118*** 0.000533** −0.000415*** 0.00234*** −0.000342 0.000142
(0.000277) (0.000215) (0.000215) (0.000258) (0.000148) (0.000341) (0.000380) (0.000497)
Standardized age on the third power −8.22e-05 −0.000176 0.000289** 9.84e-05 0.000122* 0.000427** 4.33e-05 2.95e-05
(0.000150) (0.000109) (0.000115) (0.000135) (7.10e-05) (0.000180) (0.000208) (0.000272)
Level of education of household head (baseline = never attended school)
Less than 8 classes in primary school −0.0160 0.00407 0.0196* −0.000814 0.000465 0.00227 0.00660 −0.00341
(0.0147) (0.00431) (0.0115) (0.00621) (0.00155) (0.00401) (0.0239) (0.0143)
8 to 10 years of primary school −0.0198 0.00253 0.0226** 0.00440 −2.15e-05 0.00453 0.00399 0.00492
(0.0146) (0.00425) (0.0114) (0.00605) (0.00155) (0.00328) (0.0237) (0.0137)
Lower secondary education −0.0171 0.00393 0.0315*** 0.00978 −0.000305 0.00866*** 0.00651 −0.00581
(0.0147) (0.00426) (0.0114) (0.00606) (0.00157) (0.00334) (0.0237) (0.0137)
Secondary education −0.0174 0.00800* 0.0362*** 0.0188*** 0.000708 0.0157*** 0.00475 −0.0148
(0.0147) (0.00432) (0.0114) (0.00614) (0.00164) (0.00355) (0.0238) (0.0138)
Upper secondary education −0.0196 0.00689 0.0387*** 0.0217*** 0.00283 0.0171*** 0.00464 −0.0129
(0.0147) (0.00439) (0.0115) (0.00622) (0.00175) (0.00375) (0.0238) (0.0140)
Post-secondary non-tertiary education −0.0195 0.00688 0.0366*** 0.0204*** −0.000173 0.0174*** 0.00389 −0.00555
(0.0149) (0.00446) (0.0115) (0.00641) (0.00179) (0.00431) (0.0239) (0.0143)
Adult school −0.0136 0.00769 0.0406*** 0.0228*** 0.00171 0.0148** −0.000832 −0.0146
(0.0152) (0.00500) (0.0118) (0.00721) (0.00258) (0.00596) (0.0243) (0.0155)
College −0.0171 0.00703 0.0384*** 0.0286*** 0.00160 0.0214*** 0.000975 −0.0199
(0.0147) (0.00437) (0.0114) (0.00624) (0.00180) (0.00375) (0.0238) (0.0139)
University −0.0179 0.00932** 0.0401*** 0.0453*** 0.00153 0.0265*** −0.0119 −0.0320**
(0.0148) (0.00442) (0.0115) (0.00648) (0.00183) (0.00422) (0.0240) (0.0141)
PhD −0.00759 0.0141* 0.0399*** 0.0438*** −0.00240 0.0423*** −0.00610 −0.0357*
(0.0169) (0.00737) (0.0123) (0.0100) (0.00265) (0.00957) (0.0268) (0.0184)
Constant −1.455*** −1.172*** −1.668*** −0.747*** 0.0141 −0.362 8.177*** −0.602
(0.203) (0.125) (0.210) (0.231) (0.0901) (0.341) (0.946) (0.692)
Number of observations 10,041 10,041 10,041 10,041 10,041 10,041 10,041 10,041
R-squared 0.572 0.116 0.094 0.182 0.051 0.144 0.166 0.086

  1. Source: Authors’ calculations based on HKÉF 2011. Heteroscedasticity-robust standard errors are displayed in parentheses.

  2. (*)

    Significance levels: 10%

  3. (**)

    Significance levels: 5%

  4. (***)

    Significance levels: 1%

Table B.2
Expenditure elasticities by household type.
Household type Total
Retired no no no no yes yes yes yes
Couple no no yes yes no no yes yes
Child no yes no yes no yes no yes
Food and non-alc. beverages 0.77 0.82 0.74 0.75 0.82 0.83 0.77 0.74 0.77
Alcoholic beverages 1.06 1.17 1.09 1.17 1.06 1.30 1.08 1.16 1.09
Tobacco 0.65 0.62 0.63 0.60 0.47 0.75 0.54 0.71 0.58
Clothing and footwear 1.27 1.24 1.22 1.19 1.56 1.28 1.32 1.22 1.31
Water and energy 0.35 0.41 0.34 0.31 0.45 0.44 0.39 0.38 0.37
Rents 1.29 1.56 1.56 1.75 1.80 1.55 1.80 1.80 1.64
Household services 0.83 0.84 0.74 0.73 0.87 0.85 0.78 0.71 0.79
Health 1.07 1.10 0.98 0.98 1.04 1.02 1.00 0.96 1.02
Private transport 1.07 1.08 0.98 0.97 1.21 1.06 0.99 0.95 1.05
Public transport 1.30 1.30 1.12 1.15 1.80 1.28 1.36 1.07 1.35
Communications 0.84 0.83 0.75 0.69 0.86 0.79 0.74 0.67 0.78
Recreation and culture 1.25 1.27 1.25 1.25 1.43 1.32 1.30 1.33 1.30
Education 1.47 1.30 1.44 1.43 1.80 1.80 1.80 1.64 1.59
Restaurants and hotels 1.51 1.59 1.67 1.66 1.80 1.80 1.80 1.80 1.69
Other goods and services 1.61 1.66 1.80 1.80 1.19 1.80 1.68 1.80 1.61
Durable goods 1.80 1.80 1.80 1.75 1.80 1.80 1.80 1.80 1.79

  1. Source: Authors’ calculations based on HKÉF for year 2011.

Table B.3
Price elasticities by household type.
Household type Total
Retired no no no no yes yes yes yes
Couple no no yes yes no no yes yes
Child no yes no yes no yes no yes
Food and non-alc. beverages −0.47 −0.52 −0.46 −0.47 −0.51 −0.54 −0.48 −0.46 −0.48
Alcoholic beverages −0.53 −0.59 −0.55 −0.59 −0.53 −0.65 −0.55 −0.58 −0.55
Tobacco −0.34 −0.32 −0.32 −0.31 −0.24 −0.39 −0.28 −0.37 −0.30
Clothing and footwear −0.66 −0.65 −0.63 −0.63 −0.79 −0.66 −0.68 −0.64 −0.68
Water and energy −0.22 −0.26 −0.21 −0.19 −0.30 −0.28 −0.25 −0.24 −0.24
Rents −0.66 −0.79 −0.78 −0.88 −0.90 −0.78 −0.90 −0.90 −0.83
Household services −0.46 −0.47 −0.41 −0.40 −0.48 −0.48 −0.43 −0.39 −0.44
Health −0.55 −0.56 −0.51 −0.50 −0.56 −0.54 −0.54 −0.50 −0.53
Private transport −0.56 −0.56 −0.53 −0.53 −0.62 −0.55 −0.54 −0.52 −0.56
Public transport −0.66 −0.66 −0.57 −0.58 −0.90 −0.65 −0.68 −0.54 −0.68
Communications −0.46 −0.45 −0.41 −0.38 −0.46 −0.43 −0.40 −0.37 −0.42
Recreation and culture −0.66 −0.66 −0.65 −0.65 −0.73 −0.68 −0.67 −0.68 −0.67
Education −0.74 −0.66 −0.73 −0.72 −0.90 −0.90 −0.90 −0.82 −0.80
Restaurants and hotels −0.77 −0.81 −0.85 −0.84 −0.91 −0.90 −0.90 −0.90 −0.86
Other goods and services −0.82 −0.85 −0.91 −0.92 −0.65 −0.91 −0.87 −0.92 −0.83
Durable goods −0.91 −0.91 −0.91 −0.89 −0.91 −0.91 −0.91 −0.91 −0.91

  1. Source: Authors’ calculations based on HKÉF for year 2011.

Table B.4
Changes in VAT payments by household income decile and household type (thousand HUF).
Income decile Household type Total
Retired no no no no yes yes yes yes
Couple no no yes yes no no yes yes
Child no yes no yes no yes no yes
1 −32.7 −56.8 −53.9 −73.5 −31.1 −69.7 −60.7 −77.1 −51.6
2 −35.9 −56.3 −59.4 −66.4 −38.7 −43.4 −55.9 −61.9 −50.0
3 −47.7 −51.0 −58.5 −69.8 −37.3 −76.2 −50.2 −91.6 −49.8
4 −46.6 −55.9 −65.6 −76.1 −40.0 −77.5 −55.6 −82.3 −54.7
5 −46.8 −62.4 −64.5 −73.2 −46.7 −60.0 −65.0 −65.4 −59.1
6 −44.3 −57.2 −70.8 −75.5 −45.1 −98.1 −63.9 −85.9 −61.3
7 −54.2 −54.6 −73.8 −79.3 −51.5 −77.1 −70.5 −93.4 −68.4
8 −51.3 −68.3 −76.6 −78.3 −57.9 −71.5 −77.6 −77.3 −71.7
9 −50.5 −83.5 −82.1 −85.9 −59.1 −73.7 −83.3 −119.8 −77.5
10 −64.8 −78.3 −95.6 −94.6 −69.0 −103.0 −91.4 −118.0 −88.8
Total −45.7 −59.0 −72.8 −78.0 −44.1 −73.1 −69.8 −87.7 −63.3

  1. Source: Authors’ calculations based on HKÉF for year 2011. Household income decile is defined according to the OECD-modified scale.

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