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.

Item Type:	Refereed Article
Research Division:	Economics
Research Group:	Applied Economics
Research Field:	Welfare Economics
Objective Division:	Economic Framework
Objective Group:	Microeconomics
Objective Field:	Microeconomic Effects of Taxation
UTAS Author:	Blacklow, P (Dr Paul Blacklow)
UTAS Author:	Ray, R (Professor Ranjan Ray)
ID Code:	25508
Year Published:	2002
Deposited By:	Economics and Finance
Deposited On:	2002-08-01
Last Modified:	2003-05-29
Downloads:	0