Advanced Search
MyIDEAS: Login

Revenue functions and Dupuit curves for indirect taxes with cross-border shopping

Contents:

Author Info

  • Jørgen Aasness
  • Odd Erik Nygård

    ()
    (Statistics Norway)

Registered author(s):

    Abstract

    The partial revenue from each indirect tax and the total revenue from all indirect taxes on consumer goods are derived as functions of all commodity prices, the tax rates of each commodity, total expenditure and demographic variables using a complete demand system. Within this framework we define Dupuit curves, or Laffer curves, and analyze their existence and maximum points theoretically and empirically. The macro demand system is based on exact aggregation across all households in the economy, and on exact aggregation across commodities within a detailed non-homogeneous utility tree. An empirical application for Norway with 55 commodity groups is presented. For beer, wine, spirits and tobacco, consumers can choose among buying at home, cross-border shopping/ tax-free shopping and smuggling. These substitution possibilities increase substantially the price elasticities for these goods. The partial revenue from wine as function of the tax share on wine has a single maximum value close to the actual tax rate in Norway in 1999, conditioned on all the other exogenous variables. The total revenue as a function of the tax share on wine also has a single maximum value, larger than that for the partial revenue. The same results are valid for spirits. For beer and tobacco there is no revenue maximizing tax share.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://www.ssb.no/a/publikasjoner/pdf/DP/dp573.pdf
    Download Restriction: no

    Bibliographic Info

    Paper provided by Research Department of Statistics Norway in its series Discussion Papers with number 573.

    as in new window
    Length:
    Date of creation: Jan 2009
    Date of revision:
    Handle: RePEc:ssb:dispap:573

    Contact details of provider:
    Postal: P.O.Box 8131 Dep, N-0033 Oslo, Norway
    Phone: (+47) 21 09 00 00
    Fax: (+47) 21 09 49 73
    Email:
    Web page: http://www.ssb.no/en/
    More information through EDIRC

    Related research

    Keywords: Revenue functions; indirect taxes; complete demand systems; cross-border shopping; tax-free shopping; smuggling; alcohol; tobacco;

    Find related papers by JEL classification:

    This paper has been announced in the following NEP Reports:

    References

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
    as in new window
    1. Michael A. Nelson, 2002. "Using Excise Taxes to Finance State Government: Do Neighboring State Taxation Policy and Cross-Border Markets Matter?," Journal of Regional Science, Wiley Blackwell, vol. 42(4), pages 731-752.
    2. Don Fullerton, 1982. "On the Possibility of an Inverse Relationship between Tax Rates and Government Revenues," NBER Working Papers 0467, National Bureau of Economic Research, Inc.
    3. Devereux, M.P. & Lockwood, B. & Redoano, M., 2007. "Horizontal and vertical indirect tax competition: Theory and some evidence from the USA," Journal of Public Economics, Elsevier, vol. 91(3-4), pages 451-479, April.
    4. WILDASIN, David, . "Nash equilibria in models of fiscal competition," CORE Discussion Papers RP -804, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    5. Lockwood, Ben, 1992. "Commodity Tax Competition Under Destination and Origin Principles," CEPR Discussion Papers 733, C.E.P.R. Discussion Papers.
    6. You-Qiang Wang, 1999. "Commodity Taxes under Fiscal Competition: Stackelberg Equilibrium and Optimality," American Economic Review, American Economic Association, vol. 89(4), pages 974-981, September.
    7. Aasness, Jorgen & Biorn, Erik & Skjerpen, Terje, 1993. "Engel Functions, Panel Data, and Latent Variables," Econometrica, Econometric Society, vol. 61(6), pages 1395-1422, November.
    8. Ian Crawford & Sarah Tanner, 1995. "Bringing it all back home: alcohol taxation and cross-border shopping," Fiscal Studies, Institute for Fiscal Studies, vol. 16(2), pages 94-114, May.
    9. Mintz, Jack & Tulkens, Henry, 1986. "Commodity tax competition between member states of a federation: equilibrium and efficiency," Journal of Public Economics, Elsevier, vol. 29(2), pages 133-172, March.
    10. Jørgen Aasness & Erik Biørn & Terje Skjerpen, 1995. "Distribution of Preferences and Measurement Errors in a Disaggregated Expenditure System+," Discussion Papers 149, Research Department of Statistics Norway.
    11. Ohsawa, Yoshiaki, 1999. "Cross-border shopping and commodity tax competition among governments," Regional Science and Urban Economics, Elsevier, vol. 29(1), pages 33-51, January.
    12. Rork, Jonathan C., 2003. "Coveting Thy Neighbors' Taxation," National Tax Journal, National Tax Association, vol. 56(4), pages 775-87, December .
    13. Aasness, Jorgen & Bye, Torstein & Mysen, Hans Terje, 1996. "Welfare effects of emission taxes in Norway," Energy Economics, Elsevier, vol. 18(4), pages 335-346, October.
    14. Lockwood, B., 2000. "Tax Competition and Tax Co-Ordination Under Destination and Origin Principles: A Synthesis," The Warwick Economics Research Paper Series (TWERPS) 567, University of Warwick, Department of Economics.
    15. Kanbur, Ravi & Keen, Michael, 1991. "Tax competition and tax coordination : when countries differ in size," Policy Research Working Paper Series 738, The World Bank.
    Full references (including those not matched with items on IDEAS)

    Citations

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:ssb:dispap:573. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (J Bruusgaard).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.