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Optimal Commodity Taxes in Australia
The recent changes to commodity taxes in Australia have led to renewed interest in a classic question in public finance: should the tax rates be uniform or differentiated? This article attempts to answer this question by calculating optimal commodity taxes in Australia for a nine-item disaggregation. The estimates point to non-uniform commodity taxes, even from the viewpoint of an inequality-insensitive tax planner. The optimal commodity taxes bear little resemblance with the pre-GST or post-GST tax rates. No less significant is our observation that even the purely efficiency-driven optimal commodity taxes imply lower real expenditure inequality than the actual taxes.
History
Publication title
The Australian Economic ReviewVolume
35Pagination
45-54ISSN
0004-9018Department/School
TSBEPublisher
Blackwell PublishingPlace of publication
United KingdomRepository Status
- Restricted