On welfare and revenue effects of indirect tax harmonization

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Abstract

This paper discusses whether some of the propositions concerning indirect tax harmonization that have been derived in models where tax revenue is returned to the consumers as a lump-sum transfer can also be extended to the more relevant situations in which governments levy taxes to finance the purchase of goods and services. Using a two-country model, it is argued that a family of indirect tax harmonization policies, expressed as a multilateral movement of domestic taxes towards an appropriately designed "average" tax structure, can be characterized as potentially welfare improving.
Original languageEnglish
Pages (from-to)185-193
JournalEconomics Letters
Volume60
Issue number2
DOIs
Publication statusPublished - 1 Aug 1998

Keywords

  • Commodity tax reform
  • F15
  • H87
  • Indirect tax harmonization

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