TAXBEN

This page is a knowledge crystal of subtype method. The page identifier is Op_en3178
Moderator:Heta (see all)
Upload data {{#opasnet_base_link:Op_en3178}}

The IFS has operated TAXBEN, a tax and benefit model of the UK, since 1983. The aim of TAXBEN is to model the distributional effect of personal tax and benefit policy changes across the UK (or British) economy. TAXBEN operates on both data taken from the Family Expenditure Survey, a yearly representative sample of 7,000 UK households, and, since 1995, on data from the Family Resources Survey, a yearly representative sample of around 25,000 British households. Thus, TAXBEN allows users to make accurate inferences about the aggregate revenue implications of specific changes, and to examine the distributional effects of policy on different sub-groups of the population.

TAXBEN will calculate the effects of an indirect tax reform on expenditure patterns with a user defined demand elasticity for each category of expenditure.

Result

Typical Model Applications:

• Calculating the effects of a tax or benefit reform/system (tax benefit position) on many thousands of households

Model structure:

TAXBEN is structured as follows:

1. The data creation program takes the data from the UK Family Expenditure System (FES) or the GB Family Resources Survey (FRS), and creates a subset of this which is needed by the model. The dataset contains gross incomes (FRS & FES) and expenditures (FES only), and can thus be used to model the effects of any tax or benefit system.

2. The TAXBEN proper program contains the routines which calculate household's tax payments and benefit receipts. The program allows the user to alter most of the parameters of the tax and benefit system interactively at run time.

Dynamic structure:

• The outputs from TAXBEN can potentially be integrated with models of individuals' behaviour to estimate the "second round" effects of policies.

Main Model Results:

• Aggregate results (aggregate revenue and expenditure, number of payers/claimants for each tax system or benefit, split down into five demographic sub-categories) for direct taxes, indirect taxes, non-means-tested benefits, means-tested benefits.
• Distributional results: gainers and losers by socio-economic categories, individual results for any household in the sample

Required technical infrastructure:

TAXBEN runs on a PC.

Structure of Input Data:

FES (Family Expenditure System) data (data from 1978-2000) and FRS (Family Resources Survey) (data from 1994 to 2002).; variables are uprated by the values that most simply and accurately represent the present value of the variable for a particular household in the FES year.

Model Extensions:

--

Links to other Models, Projects, Networks:

--

Regional Scope:

United Kingdom or Great Britain

See also

• IA TOOLS
• Institute for Fiscal Studies, London

References

Giles, C., McCrae, J. (1995), TAXBEN: The IFS Microsimulation Tax and Benefit Model, Working Paper Series No. W95/19, Institute for Fiscal Studies, London, UK.

McCrae, J. (1999), The Development and Uses of Tax and Benefit Simulation Models, Brazilian Electronic Journal of Economics, Vol. 2, No. 1 (Look at the page here) .