Modelling the effects of the tax and benefit system

PERU maintains and develops the Institute of Public Policy Research (IPPR) Tax-Benefit Model, which is a tax-benefit microsimulation model used by the IPPR, Resolution Foundation, Joseph Rowntree Foundation, New Economics Foundation, and Legatum Institute.

The model is used to analyse the effects of tax and benefit policy on government spending, family incomes and poverty, and to provide short-term forecasts of the distribution of income.

What is the need?

The model enables think-tanks and charities to use the highest quality evidence on the effects of government policies, to provide short-term forecasts of the incomes taking into account the latest policy proposals, and to develop and test their own ideas for reforms to the tax and benefit system.

Outputs from the model have featured in:

• The work of the Institute for Public Policy Research Commission on Economic Justice
• The Resolution Foundation’s annual Living Standards Audit
• The Joseph Rowntree Foundation’s responses to the UK government’s budget
• The New Economics Foundation report into reform of the tax and benefit system

What are we doing?

We provide maintenance and development of the model, and training for users.  This includes:

• Keeping the model up to date as new economic data and forecasts become available and as tax rates and thresholds, and benefit rates, evolve
• Developing the model to allow simulation of the effects of new policies as they are proposed by government
• Developing the model to allow users to test the effects of new policy ideas
• Providing support and training to users on tax-benefit microsimulation and on how to use the model

What will be the outcomes?

The aim of the project is to allow users to have the highest quality evidence on the effects of tax and benefit policy on government expenditure, family incomes and poverty, with which to influence government policy and public debate.

Outputs from the model have featured in:

• The work of the Institute for Public Policy Research Commission on Economic Justice
• The Resolution Foundation’s annual Living Standards Audit
• The Joseph Rowntree Foundation’s responses to the UK government’s budget and the Scottish government’s proposal for a new Child Payment
• The New Economics Foundation report into reform of the tax and benefit system

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