An Efficiency Analysis of Consumption and Production Taxation with an Application to Value-Added Taxation
AbstractThe usual arguments pro destination-based, consumption-oriented or pro origin-based, production-oriented VAT are found wanting. They largely ignore tax effects on locational choices of firms. This paper provides a comparison of consumption and production taxation within a model of firm and household mobility. It is shown that the case for consumption taxation becomes stronger when profit taxes are not available. The consumption tax is the more targeted instrument when households are to be induced to locate efficiently. It is argued that, with border controls lacking, the alternative option should be seen more in a wage tax and less in a production tax. Copyright Kluwer Academic Publishers 2000
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Bibliographic InfoArticle provided by Springer in its journal International Tax and Public Finance.
Volume (Year): 7 (2000)
Issue (Month): 1 (February)
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Web page: http://www.springerlink.com/link.asp?id=102915
value-added tax; destination and origin principle; mobile households and firms; efficiency analysis; equivalence statements;
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