cambridge-inet institute · 2017-07-24 · cambridge-inet working paper series no: 2016/12...
TRANSCRIPT
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Cambridge-INET Working Paper Series No: 2016/12
Cambridge Working Paper Economics: 1648
CONSUMER SPENDING AND FISCAL CONSOLIDATION:
EVIDENCE FROM A HOUSING TAX EXPERIMENT
Paolo Surico Riccardo Trezzi (London Business School) (University of Cambridge)
A major change of the property tax system in 2011 generated significant variation in the amount of housing taxes paid by Italian households. Using new questions added to the Survey on Household Income and Wealth (SHIW), we exploit this variation to provide an unprecedented analysis of the effects of property taxes on consumer spending. A tax on the main dwelling leads to large expenditure cuts among households with mortgage debt and low liquid wealth but generates only small revenues for the government. In contrast, higher tax rates on other residential properties reduce private savings and yield large tax revenues.
Cambridge-INET Institute
Faculty of Economics
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✩
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11th
30th
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4th
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25th
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△Ci = α+ γ · IMUmaini + δ ·△HPi + θ i + εi,
△Ci
i (△Ci = Ci,2012 − Ci,2010) IMUmaini
△HPi (△HPi = HPi,2012 −HPi,2010)
i εi i
γ
OLS γ
δ
IMUotheri
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△Ci = α+ γ1 · IMUmaini + γ2 · IMUotheri + δ ·△HPi + θ i + εi,
γ1 γ2
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IMUmaini IMUotheri
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△HPi
IMUmaini IMUotheri
i i
IMUmaini IMUotheri
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IMUmaini
IMUmaini
IMUotheri
△HPi
IMUtotali = IMUmaini +IMUotheri
IMUotheriIMUmaini IMUotheri
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IMUmaini IMUotheri
IMUmaini
IMUmaini IMUmaini
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IMUmaini
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IMUmaini
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△Carsj = α+ γ1 · IMUrateMainj + γ2 · IMUrateOtherj + θ j + εj ,
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△Carsj j IMUrateMainj
IMUrateOtherj j
θ εj
IMUmainj IMUotherj
j
IMUrateMainj
IMUrateOtherj
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IMUmaini
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010
20
Perc
ent
0 1000 2000 3000Euro
Panel (a1)
010
20
Perc
ent
0 25 50 75 100Percent
Panel (a2)
010
20
Perc
ent
0 1000 2000 3000
Euro
Panel (b1)0
1020
Perc
ent
0 25 50 75 100
Percent
Panel (b2)
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VAT IMU
100
102
104
106
Pric
e le
vel (
Inde
x, Ja
n '11
= 1
00)
Jan '11 Jul '11 Jan '12 Jul '12 Jan '13Apr '11 Oct '11 Apr '12 Oct '12
Flat-VAT items index Increased-VAT items index Cars
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-1.5
-.5-2
.0-1
.00.
00.
5
0 1 2 3 4
Multiple of monthly income used as grouping cutoff
Higher liquid wealth households Lower liquid wealth households
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Mortgagors
Non mortgagors
Mortgagors
Mortgagors
Non mortgagors
Non mortgagors
020
040
060
0
Euro
('00
0) p
er h
ouse
hold
1 2 > 2
Number of dwellings
Liquid Wealth IMUtotal
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010
2030
Perc
ent
1 2 > 2
Number of dwellings
Net saving rate Debt service ratio
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-600
-400
-200
020
040
0Eu
ro p
er h
ouse
hold
2008 2010 2012
Owners non-IMU payers IMU payers Mortgagors IMU payers
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7080
90100
110
Percent
'10Jul '11Jan '11Jul '12Jan '12Jul '13Jan '13Jul
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7080
9010
0
Inde
x (2
008
= 10
0)
2008 2009 2010 2011 2012 2013
GDP Durables Non durables Vehicles
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R2
R2
∗∗∗ ∗∗ ∗
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△△△△△
△
△ △ △△
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△
R2
△
R2
∗∗∗ ∗∗ ∗
△HP
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△
R2
△
R2
∗∗∗ ∗∗ ∗
△HP
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△
R2
△
R2
∗∗∗ ∗∗ ∗
△HP
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△
R2
△
R2
∗∗∗ ∗∗ ∗
△HP
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△
R2
△
R2
∗∗∗ ∗∗ ∗
△HP
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△
R2
∗∗∗ ∗∗ ∗
△HP
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△
R2
△
R2
∗∗∗ ∗∗ ∗
△HP
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R2
∗∗∗ ∗∗ ∗
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05
1015
Percent
0 5 10 15
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∗
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0.42
0.43
0.44
IMU
rate
s on
mai
n pr
oper
ty (p
erce
nt)
20 40 60
Votes to left-wing cohalition (percent)
Panel (a)
0.82
0.86
0.90
IMU
rate
s on
oth
er p
rope
rties
(per
cent
)
20 40 60
Votes to left-wing cohalition (percent)
Panel (b)
-3.0
0-1
.50
0.00
1.50
Nig
ht li
ghts
den
sity
gro
wth
(per
cent
)
20 40 60
Votes to left-wing cohalition (percent)
Panel (c)
-3.0
0-2
.50
-2.0
0-1
.50
Bus
ines
s in
com
e gr
owth
(per
cent
)
20 40 60
Votes to left-wing cohalition (percent)
Panel (d)
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-0.8
0.4
-0.4
0.8
0.0
Cha
nge
in m
unic
ipal
mar
gina
l per
sona
l inc
ome
rate
(per
cent
)
0.2 0.3 0.4 0.5 0.6
IMUmain rate (percent)
-0.8
-0.4
0.0
0.4
0.8
Cha
nge
in m
unic
ipal
mar
gina
l per
sona
l inc
ome
rate
(per
cent
)
0.46 0.56 0.66 0.76 0.86 0.96 1.06
IMUother rate (percent)
![Page 64: Cambridge-INET Institute · 2017-07-24 · Cambridge-INET Working Paper Series No: 2016/12 Cambridge Working Paper Economics: 1648 CONSUMER SPENDING AND FISCAL CONSOLIDATION: EVIDENCE](https://reader030.vdocument.in/reader030/viewer/2022040402/5e7d26f28faa66617d3ae8c7/html5/thumbnails/64.jpg)
56.258.860.260.759.559.7
1412.411.510.410.811.3
020
4060
8010
0
Perc
ent
2002 2004 2006 2008 2010 2012
Home owners of one property Home owners of more than one property
9.48.910.29.29.47.72.82.521.91.92
020
4060
8010
0
Perc
ent
2002 2004 2006 2008 2010 2012
Mortgagors (one property) Mortgagors (more than one property)
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05
1015
Perc
ent
2010 2011 2012 2013 2014
Int. rate on consumer credit (<5k €) Int. rate on consumer credit (>5k €)Fixed rate of morgages Variable rate of mortgages
![Page 69: Cambridge-INET Institute · 2017-07-24 · Cambridge-INET Working Paper Series No: 2016/12 Cambridge Working Paper Economics: 1648 CONSUMER SPENDING AND FISCAL CONSOLIDATION: EVIDENCE](https://reader030.vdocument.in/reader030/viewer/2022040402/5e7d26f28faa66617d3ae8c7/html5/thumbnails/69.jpg)
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△ △ △ △
△
![Page 71: Cambridge-INET Institute · 2017-07-24 · Cambridge-INET Working Paper Series No: 2016/12 Cambridge Working Paper Economics: 1648 CONSUMER SPENDING AND FISCAL CONSOLIDATION: EVIDENCE](https://reader030.vdocument.in/reader030/viewer/2022040402/5e7d26f28faa66617d3ae8c7/html5/thumbnails/71.jpg)
△
R2
∗∗∗ ∗∗ ∗
△HP
![Page 72: Cambridge-INET Institute · 2017-07-24 · Cambridge-INET Working Paper Series No: 2016/12 Cambridge Working Paper Economics: 1648 CONSUMER SPENDING AND FISCAL CONSOLIDATION: EVIDENCE](https://reader030.vdocument.in/reader030/viewer/2022040402/5e7d26f28faa66617d3ae8c7/html5/thumbnails/72.jpg)
△
R2
△
R2
∗∗∗ ∗∗ ∗
△HP
![Page 73: Cambridge-INET Institute · 2017-07-24 · Cambridge-INET Working Paper Series No: 2016/12 Cambridge Working Paper Economics: 1648 CONSUMER SPENDING AND FISCAL CONSOLIDATION: EVIDENCE](https://reader030.vdocument.in/reader030/viewer/2022040402/5e7d26f28faa66617d3ae8c7/html5/thumbnails/73.jpg)
△
R2
△
R2
∗∗∗ ∗∗ ∗
△HP
![Page 74: Cambridge-INET Institute · 2017-07-24 · Cambridge-INET Working Paper Series No: 2016/12 Cambridge Working Paper Economics: 1648 CONSUMER SPENDING AND FISCAL CONSOLIDATION: EVIDENCE](https://reader030.vdocument.in/reader030/viewer/2022040402/5e7d26f28faa66617d3ae8c7/html5/thumbnails/74.jpg)
△
△
∗∗∗ ∗∗ ∗
△HP
![Page 75: Cambridge-INET Institute · 2017-07-24 · Cambridge-INET Working Paper Series No: 2016/12 Cambridge Working Paper Economics: 1648 CONSUMER SPENDING AND FISCAL CONSOLIDATION: EVIDENCE](https://reader030.vdocument.in/reader030/viewer/2022040402/5e7d26f28faa66617d3ae8c7/html5/thumbnails/75.jpg)
05
1015
Prob
abili
ty (p
erce
nt)
0 200 400 600 800 1000
IMU (Euro)
![Page 76: Cambridge-INET Institute · 2017-07-24 · Cambridge-INET Working Paper Series No: 2016/12 Cambridge Working Paper Economics: 1648 CONSUMER SPENDING AND FISCAL CONSOLIDATION: EVIDENCE](https://reader030.vdocument.in/reader030/viewer/2022040402/5e7d26f28faa66617d3ae8c7/html5/thumbnails/76.jpg)
△
R2
△
R2
∗∗∗ ∗∗ ∗
△HP
![Page 77: Cambridge-INET Institute · 2017-07-24 · Cambridge-INET Working Paper Series No: 2016/12 Cambridge Working Paper Economics: 1648 CONSUMER SPENDING AND FISCAL CONSOLIDATION: EVIDENCE](https://reader030.vdocument.in/reader030/viewer/2022040402/5e7d26f28faa66617d3ae8c7/html5/thumbnails/77.jpg)
R2
R2
∗∗∗ ∗∗ ∗