This paper analyses the redistributive effects of the social and tax measures aimed at households that came into force in 2020. Our findings highlight an average increase of 1 per cent in disposable income for the 60 per cent of households in the middle of the income distribution, with a standard of living ranging from €1,274 to €2,803 per month. These increases in disposable income for middle-income households are partly due to the latest round of reductions in the Residential/local housing tax. The reduction in income tax is the other key measure in the 2020 budget, and results in more significant gains for households above the median, with a standard of living exceeding €1,778 per month. The 8 per cent of the lowest-income households, earning less than €837 per month, and the wealthiest 5 per cent of households, earning more than €4,034 per month, are, however, largely unaffected by the social and tax measures coming into force in 2020.
We then analyse the effect of all the measures coming into force between 2018 and 2020. We observe increases in disposable income for the majority of households, with a maximum of 3.2 per cent of disposable income between the 25th and 75th percentiles of living standards (comprising households with a standard of living between €1,274 and €2,435 per month). Only the most low-income households, earning less than €789 per month, do not, on average, benefit from these measures. The wealthiest 1 per cent of households, with a monthly standard of living above €6,880, see their disposable income increase by 2.2 per cent, with a 3.9 per cent increase for the wealthiest 0.1 per cent of households, with a monthly standard of living exceeding 18,689 euros.
