Our Economic study on publications on all physical means of support and electronic publications in the context of VAT investigated (a) the extent to which publications delivered on physical means of support and in electronic format should be considered as substitutable products; (b) the impact their current VAT rate differentiation has on the market; and (c) the potential impact of any changes in VAT undertaken in order to reduce such rate differentials. The underlying approach to substitutability was based on the concept of cross-price elasticity and tried to establish whether there were critical price differences that could make consumers switch significantly from one product to another. Elasticities were estimated using a binary choice probit model which was based on a contingent valuation survey across 24 EU Member States recording the consumers’ responses to different situations of simulated prices. The results of consumers’ reactions were used in an economic model to simulate the impact of tax changes on different market outcomes (industry’s turnover and tax revenues).
We are currently conducting an ex post evaluation of Directive 92/83/EEC. Working with Ramboll and Coffey our role is to: (a) compare tax revenues of using plato- and ABV-based measures (these are measures of alcohol strength commonly used in the industry) (b) simulate and analyse the impact of preferential treatment of small producers; (c) estimate and describe the revenue impact of exemptions related to completely and partially denatured alcohol; and (d) measure the scale and impact of fraud related to completely and partially denatured alcohol.
Our study provided estimates on direct, indirect and induced economic impacts of the European beer industry both across the EU as a whole and in individual Member States. This included direct and indirect effects on GDP, employment and tax revenue.