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). The assumption of “no behavioural response” is likely to overstate the amount of redistribution as taxes and transfers typically affect incentives to work and save (Moffit, 2011). It also entails that the efficiency costs of redistributive policies -e.g. The ultimate incidence of taxes and transfers crucially depends on how individuals and firms respond to a change in relative prices.