Yvan Guillaume

Impact of the added value tax on an economy; The case of Belgium

Abstract The study of the impact on the Belgium economy of the replacement of the turnover tax by an added value tax was undertaken by an interuniversity team at the request of the Belgian government. The work was done in close cooperation with the Belgian administration, which computed most of the added value taxs primary impacts on prices of components of final expenditure and on disposable income. The knowledge of secondary or “induced” effects which was necessary in order to have a complete grasp of the consequences of the change in the system, was obtained by simulation with an econometric model of alternative policies envisaged by the government.