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Piecemeal Reform of Domestic Indirect Taxes toward Uniformity in the Presence of Pollution: with and without a Revenue Constraint

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Author Info

  • Michael S. Michael
  • Sajal Lahiri
  • Panos Hatzipanayotou

Abstract

The literature on indirect tax reforms in pollution-ridden economies is quite limited. This paper, using a general equilibrium model of a perfectly-competitive small open economy with both production and consumption generated pollution, considers the welfare implications of tax reforms that take the structure of consumption and production taxes toward uniformity. Specifically, both in the presence and absence of a binding government revenue constraint, we derive sufficient conditions for welfare improvement in the case where we implement (i) reforms in either production or consumption taxes, and (ii) reforms in both consumption and production taxes.

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File URL: http://papers.econ.ucy.ac.cy/RePEc/papers/03-13.pdf
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Bibliographic Info

Paper provided by University of Cyprus Department of Economics in its series University of Cyprus Working Papers in Economics with number 03-2013.

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Length: 26 pages
Date of creation: Mar 2013
Date of revision:
Handle: RePEc:ucy:cypeua:03-2013

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Web page: http://www.econ.ucy.ac.cy

Related research

Keywords: Indirect tax reforms; Production and consumption generated pollution; Welfare; Government tax revenues;

This paper has been announced in the following NEP Reports:

References

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Cited by:
  1. Lahiri Sajal & Peri Silva, 2013. "Potential Pareto-improving Move towards Most Favored Nation Tariffs," Development Working Papers 348, Centro Studi Luca d\'Agliano, University of Milano, revised 24 Apr 2013.

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