ABSTRACT
In this chapter, the authors describe the reform they analyse and simulate. They review the datasets and microsimulation models. The authors explain how they have matched expenditure data in the underlying income dataset of the tax-benefit model, and how demand reactions and labour supply have been modelled. They prepare the ground for the sensitivity analysis by describing the different possibilities to measure welfare effects of price changes. The authors present the results of the reform without taking into account the labour supply reaction. They focus on the sensitivity of the picture of gainers and losers to the chosen welfare concept. The authors describe flexible labour supply for a subsample of the population and redo the sensitivity analysis of the distributional picture to the chosen welfare concept. In Belgium, as in many other European countries, proposals are launched to reduce social security contributions and switch to indirect taxes as an alternative base to finance the social security system.
