Abstract
We present a general equilibrium model of fiscal incidence using a modified Harberger Model and a Social Accounting Matrix (SAM) framework. We extend the standard Harberger model in order to incorporate inter-industry transactions and pre- existing taxes. The model is applied to the SAM for Egypt to analyze the redistributive role of indirect taxes and subsidies for urban and rural households. The empirical results show that the redistribution effects of subsidies in Egypt are minimal due to the existing tax structure. However, the distributional effects between two classes of households are relatively significant when we introduce a hypothetical policy of selective taxes on necessities.
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