The majority of microsimulation models are confined to ex ante evaluations of
reforms in the personal income tax system or in social security contributions
and benefits. This paper reports on an incorporation of indirect taxes, mainly
VAT, excises and other consumption taxes, in the EUROMOD-microsimulation
model. We sharpen the distributional picture of the overall tax and benefit
system by bringing the indirect tax incidence for five European countries into
the picture. We investigate explanations for the regressivity, and study the
distributional effect of an integrated simulation of changes in social security
contributions and indirect taxes as compensating channels of collecting
government revenue.