The Distributional Effect of Indirect Taxes on Irish Households

Abstract

We develop an indirect tax microsimulation model, using the 2022/2023 Household Budget Survey, to model how indirect taxes affect Irish households. The modelling accounts for value added tax, specific excise duties on fuel, alcohol and tobacco products, alongside the carbon tax. Our findings indicate indirect tax liabilities are regressive when assessed relative to household income, with a more neutral pattern emerging when comparison is made to household expenditure.