Abstrakt
This paper estimates incidence of consumption taxation. We use data from natural experiment that took place in 2004 in the Czech Republic.
Not only the value added tax (VAT) rates applicable to a range of goods and services changed but also the classification into the standard vs. reduced rate group has been modified. Most importantly, some goods and services experienced no change.
This allows us to use difference-in-differences estimation to assess the extent to which taxes are shifted on consumers.