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Microeconomic Estimation of the Consequences of Tax Reform (Taking into Consideration Expectations of Economic Agents) | 13-04-2004
The project has been supported by the Moscow Public Scientific Fund with the financial support from the USAID.

Start Date: July 2003 
Completion Date: March 2004

Project Summary:

The study analyzes the microeconomic consequences of the tax reform, as described in the Medium-Term (2003-2005) Development Program by the Ministry of Economic Development and Trade. Specifically, it estimates the consequences of the VAT, sales tax and unified social tax reforms for the public sector, producers and households. The study models the decrease in the VAT from 20% to 18%, the abolishment of the sales tax, and the reduction of the unified social tax at such a rate that would satisfy the financial stability condition set by the government for the pension system.

The study combines a Computable General Equilibrium (CGE) and a microsimulation models and uses them sequentially in order to capture the distribution effect of the tax reform and compare changes of a wide range of parameters in different scenarios. The calibration of the CGE model is based on the Social Accounting Matrix (SAM) derived from the 2000 National Accounts of the Russian Federation, and Input-Output tables for the same year. The calibration of the microsimulation model is based on the data from the 10th round of RLMS.

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