Moving towards better targeted aid through in-kind benefits, cash transfers and vouchers appears thus as a more effective redistribution tool (EC, 2007, Van den Noord and Heady, 2001). In practice, taxes and transfers affect incentives to work and save. The assumption of “no behavioural response” is likely to overstate the amount of redistribution achieved by cash transfers as these also typically weaken the work incentives of recipients (Moffit, 2011). Reduced VAT rates and exemptions are taken into account in the OECD estimates of the consumption tax rate at different income levels.