Figures and tables in The evaluation of fiscal consolidation strategies

Abstract

In this paper, we present a framework and perform an assessment of different fiscal consolidation strategies both on the revenue as well as on the expenditure sides of the budget in the context of Slovakia. The model we use for simulations is a behavioural general-equilibrium what-if model. We analyse the simulated impacts of consolidation strategies on growth and on fiscal balance (both in short- and long- term). The microsimulation approach allows us also to evaluate the distributional impacts. In addition, the approach permits to compare the statutory with the resulting tax incidence in the long-run. We simulate strategies based on taxing labour income, taxing consumption as well as cutting expenditures on social transfers. We document that corporate and labour taxes are more unfavourable to output growth, while consumption taxes belong to less damaging instruments for consolidation. We show that spending cuts may promote employment and are not detrimental to output growth.

This article contains 15 tables.

Tables

Table 1. Scaling of the simulation results.

Consolidation instrument	Scaling coefficient	Source of the official statistics for 2018
Personal income tax	1.17	Committee for the tax forecasts (Ministry of Finance)
Social and health insurance contributions	1.04	Committee for the tax forecasts (Ministry of Finance)
Social transfers	1.07	Information system on Government Budget
Value added tax	1.97	Committee for the tax forecasts (Ministry of Finance) When scaling the VAT, only the part paid by households is considered (estimated as the 87% of the total volume).

Notes: Scaling coefficient is given as the ratio of the official statistics to simulated outcome from the model. Official statistics for every consolidation instrument is a forecasted value.

Table 2. Description of benchmark scenarios.

Scenario name	Actual/baseline legislation	Simulated policy change in scenario
Taxing labour income
PIT – 1 p.p. increase in the standard rate	Two tax rates of personal income tax apply. – 19% levied on yearly income up to 35 268 € – 25% levied on income exceeding 35 268 €	The standard rate is increased from 19% to 20%.
PIT – One tax rate		Introduction of one tax rate of 22%. Basic and spouse tax allowances apply.
PIT – Decrease in tax allowances	Basic and spouse tax allowance up to 3 830 € yearly (for each) can be deducted from individual taxable income.	Basic and spouse tax allowance up to 3 630 € yearly (for each) can be deducted from individual taxable income.
Taxing consumption
VAT – 1 p.p. increase in the standard rate	The standard rate is set to 20%, the reduced rate 10%. A number of goods are exempt from the tax base.	The standard rate is increased to 21%.
VAT – abolition of the reduced rate		The reduced rate is abolished, all goods are taxed at the standard rate 20%.
Payroll taxes: employees vs. employers
HIC – 1 p.p. increase in the rate paid by employers	Health insurance contributions: –4% employees – 10% employers	Increase of HIC paid by employers to 11%.
HIC – 1 p.p. increase in the rate paid by employees		Increase of HIC paid by employees to 5%
Taxing firms
CIT – 1 p.p. increase in the rate	Effective tax rate set to 19.5%	Effective tax rate increased to 20.5%

Table 3. Description of benchmark scenarios.

Scenario name	Actual/baseline legislation	Simulated policy change in scenario
Cutting expenditures
Reduction of family related transfers and credits	Family transfers include: – parental allowance (monthly 214.70 € – child benefits (monthly 23.69 € and 11.1 € per child) – child birth benefit (one-time 829.86 € at birth) Entitlement to family transfers is currently unconditional on income and applies up to 3 years of age of the child. Child birth benefit is granted up to the third childbirth.	The eligibility for family transfers is tested against an assessed income defined as the gross taxable income of members of the family. If the family's assessed income is higher than 4 times the amount of their minimum subsistence level (MSL), the family transfers are not granted. Tax credit for dependent children is not granted if the above-mentioned income condition is fulfilled.
	Tax credit for dependent children in the amount of 21.41 € monthly per child.
Reduction of material need benefits	Material need allowances consist of: – basic material need benefit (MNB) varies from 61.60 € up to 216.10 € monthly, depending on the family structure. – allowance for pregnant women and parent of children up to 1 year of age: 13.50 € – activation and protection allowance: 63.07 € – housing allowance: 55.80 € or 89.20 €, depending on the family structure	Reduction of MNB (of all allowances) by 10%.
	Family is eligible for MNB if their assessed income (net income from labour plus pensions) is below MSL of the family. MSL levels are: – first adult 199.48 € – jointly considered another person 139.16 € – dependent children 91.06 €

Table A.1. Point estimates of probit model (pooled regression 2012–15).

Dependent variable ACTIVE	Females	Males
logGTW	0.314*** (0.043)	0.248*** (0.054)
logNY	–0.201*** (0.018)	–0.181*** (0.023)
EDU: Secondary	0.586*** (0.033)	0.626*** (0.039)
EDU: Tertiary	0.760*** (0.042)	0.843*** (0.051)
Parent with child under 3y.	–2.159*** (0.037)	0.450*** (0.087)
Parent with child over 3y.	0.075** (0.029)	0.413*** (0.044)
Fam: Married	–0.070* (0.036)	–0.076* (0.045)
Fam: Divorced / Widowed	0.121*** (0.040)	–0.002 (0.066)
Has working partner	0.229*** (0.034)	0.289*** (0.042)
Chronic disease	–0.728*** (0.025)	–1.162*** (0.032)
Student	–2.042*** (0.038)	–2.240*** (0.040)
Pensioner	–2.465*** (0.034)	–2.873*** (0.047)
Year 2013	–0.072** (0.030)	0.054 (0.038)
Year 2014	–0.103*** (0.030)	0.051 (0.038)
Year 2015	–0.107*** (0.030)	0.036 (0.038)
Constant	0.090 (0.367)	0.580 (0.479)
Observations	27 682	24 057
R2 pseudo	0.538	0.638

Notes: Standard errors in parentheses, Reference categories for the dummies: Education (ref. Elementary), Family status (ref. Single), Year (ref. 2012).

p<0.1.

p<0.05.

p<0.01.

Table A.2. Summary of the parameters used in the macro block of the model.

Parameter	Value	Description / Source
α	0.43	Share of labour in CES production function estimate (Bencik, 2008)
σ	(0.48–1)/0.48	Transformed elasticity of substitution (Bencik, 2008)
β	0.99	Discount factor
λ	0.004	Job separation rate (Labour Market Developments in Europe 2013, EC, 2013)
ξ	0.8	Match elasticity of the unemployed (Zeleznik, 2012 or Nemec, 2013)
μ	0.05	Scaling factor of matching function – efficiency of the process (calibrated)
c	1.00	Vacancy posting costs (calibrated)
r	0.01	Quarterly interest rate – price of capital (calibrated)
τ_K	0.172	Effective corporate income tax rate (calibrated)

Table B.1-1. Simulated short-term effects in %.

			SIC and HIC paid by							Inequality
	Fiscal effect	Fiscal revenues	PIT	employees	employers	self-empl	VAT	CIT	Fiscal expend	Post VAT income	GINI	Kak wani
baseline, 2018	9 284	17 851	2 414	2 616	6 922	1 108	3 115	1 676	8 567	1 192	27.4	6.4
PIT – 1 p.p. increase in the standard rate	1.40	0.73	5.70 ***	0.00	0.00	0.00	−0.25 ***	0.00	0.00	−0 49 ***	−0.12	0.24
PIT – one tax rate	4.11	2.14	16.76 ***	0.00	0.00	0.00	−0.73 ***	0.00	0.00	−1 44 ***	−0.35	0.61
PIT – decreasing tax allowances	0.84	0.44	3 44 ***	0.00	0.00	0.00	−0.16 **	0.00	0.00	−0 29 ***	0.00	−0.30
HIC – 1 p.p. increase in the rate paid by employers	1.76	0.92	0.00	0.00	2.69 ***	0.00	0.00	−1.34	0.00	0.00	0.00	0.00
HIC – 1 p.p. increase in the rate paid by employees	1.52	0.79	−1.50 ***	7.12 ***	0.00	0.00	−0.28 ***	0.00	0.00	−0.53 ***	−0.08	−0.05
VAT – 1 p.p. increase in the standard rate	1.34	0.70	0.00	0.00	0.00	0.00	3.99 ***	0.00	0.00	−0.47	0.00	0.00
VAT – abolition of reduced rate	0.94	0.49	0.00	0.00	0.00	0.00	2.80 ***	0.00	0.00	−0.33	0.00	0.00
CIT – 1 p.p. increase in the rate	0.84	0.44	0.00	0.00	0.00	0.00	0.00	4.65	0.00	0.00	0.00	0.00
Reduction of family related transfers and credits	1.52	0.24	210 ***	0.00	0.00	0.05	−0.30 ***	0.00	−1 16***	−0.56 ***	−0.20	0.16
Reduction of material need benefits	0.40	−0.02	0.00	0.00	0.00	0.00	−0.12 *	0.00	−0.48 ***	−0.15 *	0.16	−0.03

Notes: First row (baseline) represents direct output from the simulation model; monetary variables in mil. euros.

Subsequent rows display changes in % from baseline values. In case of inequality measures the numbers express changes in percentage points.

SIC – social insurance contributions, HIC – health insurance contributions, PIT – personal income tax, VAT – value added tax, CIT – corporate income tax.

denote statistically significant difference between baseline and scenario at 10%, 5% and 1% levels, respectively. Standard errors are computed conventionally. Thus, the statistical significance reflects sampling error, rather than modelling uncertainty. Statistical significance is displayed for PIT, SIC&HIC, VAT, fiscal expenditures and disposable income. CIT is computed directly using the effective tax rate. Post-VAT income reflects households' disposable income minus VAT expenses.

Table B.1-2. Simulated behavioural effects in %.

			SIC and HIC paid by							Inequality
	Fiscal effect	Fiscal revenues	PIT	employees	employers	self-empl	VAT	CIT	Fiscal expend	Post VAT income	GINI	Kak wani
baseline, 2018	9 284	17 851	2 414	2 616	6 922	1 108	3 115	1 676	8 567	1 192	27.4	6.4
PIT – 1 p.p. increase in the standard rate	1.23	0.64	5.51 ***	−0.12	−0.12	0.00	−0.28 ***	0.06	0.00	−0.55 ***	−0.14	0.24
PIT – one tax rate	3.58	1.86	16.20 ***	−0.34 ***	−0.34 ***	−0.22	−0.85 ***	0.17	0.00	−1.65 ***	−0.41	0.68
PIT – decreasing tax allowances	0.81	0.43	3.45***	−0.01	−0.01	0.00	−0.16 **	0.00	0.02	−0.30 ***	0.01	−0.30
HIC – 1 p.p. increase in the rate paid by employers	1.76	0.92	0.00	0.00	2.69 ***	0.00	0.00	−1.34	0.00	0.00	0.00	0.00
HIC – 1 p.p. increase in the rate paid by employees	1.29	0.68	−1 67 ***	6.96 ***	−0.16 **	0.00	−0.32 ***	0.08	0.03	−0.61 ***	−0.07	−0.06
VAT – 1 p.p. increase in the standard rate	1.34	0.70	0.00	0.00	0.00	0.00	3.99 ***	0.00	0.00	−0.47	0.00	0.00
VAT – abolition of reduced rate	0.94	0.49	0.00	0.00	0.00	0.00	2.80 ***	0.00	0.00	−0.33	0.00	0.00
CIT – 1 p.p. increase in the rate	0.84	0.44	0.00	0.00	0.00	0.00	0.00	4.65	0.00	0.00	0.00	0.00
Reduction of family related transfers and credits	1.51	0.23	2 09 ***	−0.01	−0.01	0.05	−0.30 ***	0.00	−1.16***	−0.56 ***	−0.21	0.15
Reduction of material need benefits	0.79	0.10	0.01	0.23 ***	0.23 ***	0.00	−0.05	−0.12	−0.64 ***	−0.05	0.03	0.00

Notes: First row (baseline) represents direct output from the simulation model; monetary variables in mil. euros.

Subsequent rows display changes in % from baseline values. In case of inequality measures the numbers express changes in percentage points.

SIC – social insurance contributions, HIC – health insurance contributions, PIT – personal income tax, VAT – value added tax, CIT – corporate income tax.

Table B.1-3. Simulated long term effects in %.

			SIC and HIC paid by							Inequality
	Fiscal effect	Fiscal revenues	PIT	employees	employers	self-empl	VAT	CIT	Fiscal expend	Post VAT income	GINI	Kak wani
baseline, 2018	9 284	17 851	2 414	2 616	6 922	1 108	3 115	1 676	8 567	1 192	27.4	6.4
PIT – 1 p.p. increase in the standard rate	1.24	0.64	5.60 ***	−0.07	−0.07	0.03	−0.26 ***	−0.36	0.00	−0.52 ***	−0.13	0.23
PIT – one tax rate	3.63	1.89	16.51 ***	−0.17 **	−0.17 **	−0.12	−0.80 ***	−1.12	0.01	−1.55 ***	−0.40	0.67
PIT – decreasing tax allowances	0.84	0.45	3.52 ***	0.04	0.04	0.03	−0.15 **	−0.26	0.02	−0 27 ***	0.01	−0.30
HIC – 1 p.p. increase in the rate paid by employers	1.10	0.57	−0 87 ***	−0.53 ***	215 ***	−0.47	− 0.17 **	−0.08	0.00	−0 32***	−0.05	0.04
HIC – 1 p.p. increase in the rate paid by employees	1.32	0.70	−1 52***	7.06 ***	−0.06	0.03	−0.30 ***	−0.59	0.03	−0.55 ***	−0.07	−0.06
VAT – 1 p.p. increase in the standard rate	1.35	0.70	0.02	0.01	0.01	0.01	4.00 ***	−0.05	0.00	−0.46	0.00	0.00
VAT – abolition of reduced rate	0.94	0.49	0.01	0.00	0.00	0.00	2.80 ***	−0.02	0.00	−0.33	0.00	0.00
CIT – 1 p.p. increase in the rate	0.76	0.40	−0.14	−0.08	−0.08	−0.05	−0.03	4.96	0.00	−0.05	−0.01	0.00
Reduction of family related transfers and credits	1.48	0.21	2.02***	−0.05	−0.05	0.03	−0.31 ***	0.21	−1 16***	−0.58 ***	−0.21	0.16
Reduction of material need benefits	0.60	0.00	−0.51 ***	−0.09	−0.09	−0.34	−0.15 **	1.79	−0.64 ***	−0 24 ***	0.00	0.04

Notes: First row (baseline) represents direct output from the simulation model; monetary variables in mil. euros.

Subsequent rows display changes in % from baseline values. In case of inequality measures the numbers express changes in percentage points.

SIC – social insurance contributions, HIC – health insurance contributions, PIT – personal income tax, VAT – value added tax, CIT – corporate income tax.

Table B.2-1. Simulated short-term effects in mil. EUR.

			SIC and HIC paid by
	Fiscal effect	Fiscal revenues	PIT	employees	employers	self-empl	VAT	CIT	Fiscal expend
re-scaled baseline, 2018;	13 096	22 278	2 829	2 822	7 465	1 195	5 393	2 575	9 182
PIT – 1 p.p. increase in the standard rate	147.8	147.8	161.09	0.00	0.00	0.00	−13.30	0.00	0.0
PIT – one tax rate	434.6	434.6	474.03	0.00	0.00	0.00	−39.38	0.00	0.0
PIT – decreasing tax allowances	88.7	88.7	97.33	0.00	0.00	0.00	−8.68	0.00	0.0
HIC – 1 p.p. increase in the rate paid by employers	166.4	166.4	0.00	0.00	200.97	0.00	0.00	−34.6	0.0
HIC – 1 p.p. increase in the rate paid by employees	143.4	143.5	−42.45	200.98	0.00	0.00	−15.04	0.00	0.1
VAT – 1 p.p. increase in the standard rate	245.6	245.6	0.00	0.00	0.00	0.00	245.59 *	0.00	0.0
VAT – abolition of reduced rate	172.2	172.2	0.00	0.00	0.00	0.00	172.21 *	0.00	0.0
CIT – 1 p.p. increase in the rate	119.8	119.8	0.00	0.00	0.00	0.00	0.00	119.8	0.0
Reduction of family related transfers and credits	136.8	44.1	59.52	0.00	0.00	0.64	−16.06	0.00	−92.7
Reduction of material need benefits	15.7	−6.7	0.00	0.00	0.00	0.00	−6.70	0.00	−22.4

Notes: First row represents the re-scaled baseline values for fiscal variables; monetary variables in mil. euros. For VAT, baseline value is the estimated amount of VAT paid by households. Subsequent rows display difference in mil. euros compared to re-scaled baseline values.

SIC – social insurance contrib., HIC – health insurance contrib., PIT – personal income tax, VAT – value added tax, CIT – corporate income tax.

For scenarios involving the change of VAT rate the baseline is rescaled to the total amount in the economy (6 149.8 mil. euros).

B.2-2. Simulated behavioural effects in mil. EUR.

			SIC and HIC paid by
	Fiscal effect	Fiscal revenues	PIT	employees	employers	self-empl	VAT	CIT	Fiscal expend
re-scaled baseline, 2018	13 096	22 278	2 829	2 822	7 465	1 195	5 393	2 575	9 182
PIT – 1 p.p. increase in the standard rate	130.1	130.1	155.94	−3.39	−8.94	−0.06	−14.99	1.5	0.0
PIT – one tax rate	378.9	379.1	458.26	−9.57	−25.31	−2.68	−45.98	4.4	0.2
PIT – decreasing tax allowances	86.8	87.8	97.51	−0.28	−0.74	0.00	−8.87	0.1	0.9
HIC – 1 p.p. increase in the rate paid by employers	166.4	166.4	0.00	0.00	200.97	0.00	0.00	−34.6	0.0
HIC – 1 p.p. increase in the rate paid by employees	120.7	121.9	−47.32	196.26	−11.58	−0.03	−17.45	2.0	1.2
VAT – 1 p.p. increase in the standard rate	245.6	245.6	0.00	0.00	0.00	0.00	245.59 *	0.0	0.0
VAT – abolition of reduced rate	172.2	172.2	0.00	0.00	0.00	0.00	172.21 *	0.0	0.0
CIT – 1 p.p. increase in the rate	119.8	119.8	0.00	0.00	0.00	0.00	0.00	119.8	0.0
Reduction of family related transfers and credits	135.3	42.6	59.04	−0.28	−0.74	0.63	−16.20	0.1	−92.7
Reduction of material need benefits	48.6	18.3	0.32	6.44	17.33	0.00	−2.83	−3.0	−30.3

SIC – social insurance contrib., HIC – health insurance contrib., PIT – personal income tax, VAT – value added tax, CIT – corporate income tax.

For scenarios involving the change of VAT rate the baseline is rescaled to the total amount in the economy (6 149.8 mil. euros).

Table B.2-3. Simulated long term effects in mil. EUR.

			SIC and HIC paid by
	Fiscal effect	Fiscal revenues	PIT	employees	employers	self-empl	VAT	CIT	Fiscal expend
re-scaled baseline, 2018	13 096	22 278	2 829	2 822	7 465	1 195	5 393	2 575	9 182
PIT – 1 p.p. increase in the standard rate	128.5	128.5	158.53	−1.90	−5.04	0.31	−14.09	−9.3	0.0
PIT – one tax rate	375.7	375.9	467.12	−4.91	−13.01	−1.43	−43.02	−28.8	0.2
PIT – decreasing tax allowances	88.2	89.1	99.69	1.02	2.69	0.35	−8.07	−6.6	0.9
HIC – 1 p.p. increase in the rate paid by employers	103.8	103.9	−24.65	−14.94	160.34	−5.67	−9.03	−2.2	0.1
HIC – 1 p.p. increase in the rate paid by employees	119.3	120.7	−43.00	199.11	−4.65	0.31	−15.96	−15.1	1.4
VAT – 1 p.p. increase in the standard rate	246.0	246.0	0.46	0.27	0.72	0.08	245.80 *	−1.3	0.0
VAT – abolition of reduced rate	172.4	172.4	0.17	0.10	0.28	0.04	172.28 *	−0.5	0.0
CIT – 1 p.p. increase in the rate	113.2	113.3	−3.90	−2.35	−6.19	−0.62	−1.44	127.8	0.0
Reduction of family related transfers and credits	133.8	41.1	57.26	−1.35	−3.56	0.35	−16.86	5.3	−92.7
Reduction of material need benefits	40.7	10.4	−14.47	−2.58	−6.39	−4.09	−8.23	46.2	−30.3

SIC – social insurance contrib., HIC – health insurance contrib., PIT – personal income tax, VAT – value added tax, CIT – corporate income tax.

For scenarios involving the change of VAT rate the baseline is rescaled to the total amount in the economy (6 149.8 mil. euros).

Table B.3. Changes in probabilities of being economically active (in p.p.).

	All	Age				Parent with child up to 3 years
			25-50,	25-50,
		15-24	female	male	50+	Female	Male
baseline probabilities, 2018	64.06	35.13	74.69	92.88	50.17	26.56	97.24
PIT – 1 p.p. increase in the standard rate	−0.014	−0.007	−0.008	−0.006	−0.025	−0.017	−0.002
PIT – one tax rate	−0.043	−0.024	−0.024	−0.020	−0.077	−0.051	−0.007
PIT – decreasing tax allowances	−0.012	−0.022	−0.014	−0.007	−0.010	−0.020	−0.003
HIC – 1 p.p. increase in the rate paid by employers	0.000	0.000	0.000	0.000	0.000	0.000	0.000
HIC – 1 p.p. increase in the rate paid by employees	−0.027	−0.035	−0.036	−0.013	−0.027	−0.063	−0.007
VAT – 1 p.p. increase in the standard rate	−0.002	−0.004	−0.004	0.001	−0.002	−0.010	0.000
VAT – abolition of reduced rate	−0.001	−0.002	−0.003	0.002	−0.001	−0.006	0.000
CIT – 1 p.p. increase in the rate	0.000	0.000	0.000	0.000	0.000	0.000	0.000
Reduction of family related transfers and credits	0.008	0.021	0.016	0.005	0.001	0.073	0.014
Reduction of material need benefits	0.093	0.086	0.176	0.064	0.065	0.107	0.051

Notes: First row represents probabilities of being economically active simulated by the model. Subsequent rows express the changes in percentage points from baseline probabilities for different population groups.

	All	Education (age 25-50)			Distribution effects (income quintiles)
		Prim.	Sec.	Univ.	Q1	Q2	Q3	Q4	Q5
baseline probabilities, 2018	64.06	69.48	85.77	83.84	81.34	87.99	92.45	95.84	96.63
PIT – 1 p.p. increase in the standard rate	−0.014	−0.003	−0.006	−0.010	0.005	−0.004	−0.009	−0.010	−0.009
PIT – one tax rate	−0.043	−0.011	−0.019	−0.029	0.015	−0.012	−0.026	−0.031	−0.028
PIT – decreasing tax allowances	−0.012	−0.006	−0.012	−0.008	−0.015	−0.025	−0.011	−0.005	−0.002
HIC – 1 p.p. increase in the rate paid by employers	0.000	0.000	0.000	0.000	0.000	0.000	0.000	0.000	0.000
HIC – 1 p.p. increase in the rate paid by employees	−0.027	−0.081	−0.020	−0.019	−0.014	−0.015	−0.017	−0.011	−0.007
VAT – 1 p.p. increase in the standard rate	−0.002	0.000	−0.001	−0.003	−0.005	−0.005	−0.003	−0.002	−0.001
VAT – abolition of reduced rate	−0.001	0.002	0.000	−0.001	−0.002	−0.003	−0.001	−0.001	0.000
CIT – 1 p.p. increase in the rate	0.000	0.000	0.000	0.000	0.000	0.000	0.000	0.000	0.000
Reduction of family related transfers and credits	0.008	0.000	0.008	0.017	0.006	0.006	0.009	0.008	0.029
Reduction of material need benefits	0.093	0.461	0.108	0.056	0.361	0.102	0.047	0.033	0.026

Table B.4. Long-term changes in macroeconomic indicators.

	employment (PP)	work intensity (P.P.)	eff. labour (P.P.)	gross wages (%)	net wages (%)	outPut (%)	unemP. rate (P.P.)
PIT – 1 p.p. increase in the standard rate	−0.02	−0.03	−0.08	0.05	−0.39	−0.08	0.02
PIT – one tax rate	−0.06	−0.09	−0.22	0.14	−1.18	−0.23	0.06
PIT – decreasing tax allowances	−0.02	0.00	−0.01	0.04	−0.32	−0.01	0.02
HIC – 1 p.p. increase in the rate paid by employers	0.00	−0.01	−0.02	−0.45	−0.38	−0.03	0.00
HIC – 1 p.p. increase in the rate paid by employees	−0.03	−0.03	−0.08	0.08	−0.48	−0.08	0.03
VAT – 1 p.p. increase in the standard rate	0.00	0.00	0.00	0.01	0.01	0.00	0.00
VAT – abolition of reduced rate	0.00	0.00	0.00	0.01	0.01	0.00	0.00
CIT – 1 p.p. increase in the rate	0.00	0.00	0.00	0.00	0.00	0.00	0.00
Reduction of family related transfers and credits	0.00	0.00	0.00	−0.07	−0.06	−0.04	0.00
Reduction of material need benefits	0.01	0.00	0.00	−0.03	−0.16	0.00	−0.01

Notes: employment – employment rate, work intensity – intensive margin response, effective labour – total labour supply, gross wages – gross wages of working population, net wages – gross wages of working population net of social and health insurance contributions, output – GDP.

	capital (%)	SIC&HIC paid by employers (p.p.)	CIT (%)	gross profit (%)	net profit (%)	unit labour costs (%)
PIT – 1 p.p. increase in the standard rate	−0.08	0.00	−0.36	−0.36	−0.36	0.04
PIT – one tax rate	−0.23	0.01	−1.12	−1.12	−1.12	0.13
PIT – decreasing tax allowances	−0.01	0.00	−0.26	−0.26	−0.26	0.04
HIC – 1 p.p. increase in the rate paid by employers	−0.03	0.58	−0.08	−0.08	−0.08	0.01
HIC – 1 p.p. increase in the rate paid by employees	−0.08	0.00	−0.59	−0.59	−0.59	0.07
VAT – 1 p.p. increase in the standard rate	0.00	0.00	−0.06	−0.06	−0.06	0.01
VAT – abolition of reduced rate	0.00	0.00	−0.05	−0.05	−0.05	0.01
CIT – 1 p.p. increase in the rate	0.00	0.00	−0.02	−0.02	−0.02	0.00
Reduction of family related transfers and credits	−0.50	0.00	4.96	0.30	−0.67	−0.03
Reduction of material need benefits	0.00	0.00	0.21	0.21	0.21	−0.03

Notes: capital – capital stock, CIT – corporate income tax, gross profit – gross profit of firms, net profit – profit of firms net of taxes, unit labour costs – total labour costs per one unit of output, SIC – social insurance contributions, HIC – health insurance contributions, CIT – corporate income tax.