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National Policy Interests in the Duty-Free Market

Author

Listed:
  • Vidar Christiansen
  • Stephen Smith

Abstract

In 1999 the EU abolished duty-free on intra-EU travel. Other European countries and many countries outside Europe still retain duty-free shopping for international travellers, as does the EU in relation to external travel. This paper looks at national policy interests in the retention, or further abolition, of duty-free. We note that these will relate closely to the structure of competition in the duty-free market, and to the tax levels on high-street sales in different countries. The existence of duty-free trade requires that countries have reasons both to admit duty-free goods and to permit their sale to departing passengers. We argue that low-tax countries might be more likely to perceive gains from unilateral abolition of duty-free sales to departing passengers, while high-tax countries would only benefit from concerted action to abolish duty-free. (JEL D4, H2, H87)

Suggested Citation

  • Vidar Christiansen & Stephen Smith, 2004. "National Policy Interests in the Duty-Free Market," CESifo Economic Studies, CESifo Group, vol. 50(2), pages 351-375.
    • Handle: RePEc:oup:cesifo:v:50:y:2004:i:2:p:351-375.
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    File URL: http://hdl.handle.net/10.1093/cesifo/50.2.351
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    Citations

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    Cited by:

    1. Vidar Christiansen & Stephen Smith, 2008. "Optimal commodity taxation with duty-free shopping," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 15(3), pages 274-296, June.
    2. Sijbren Cnossen & D. Forrest & S. Smith, 2009. "Taxation and regulation of smoking, drinking and gambling in the European Union," CPB Special Publication 76.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    3. Sijbren Cnossen, 2006. "Alcohol taxation and regulation in the European Union," CPB Discussion Paper 76.rdf, CPB Netherlands Bureau for Economic Policy Analysis.

    More about this item

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H87 - Public Economics - - Miscellaneous Issues - - - International Fiscal Issues; International Public Goods

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