Cross-Border Shopping and the Sales Tax: A Reexamination of Food Purchases in West Virginia
AbstractIn this paper we present new evidence of cross-border shopping in response to sales taxation. While several instructive studies provide estimates of the cross-border shopping effect, we utilize a unique opportunity to evaluate the effect of a large discrete change in sales tax policy. Using county level data on food income and sales tax data for West Virginia over the 1982-2000 period we estimate that for every one-percentage point increase in the county relative price ratio due to sales tax change, the per capita food income decreases by about 0.7 percent. Our estimates indicate that food sales fell in West Virginia border counties by about 4 percent as a result of the imposition of the 6 percent sales tax on food in 1989.
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Bibliographic InfoPaper provided by UW-Whitewater, Department of Economics in its series Working Papers with number 05-07.
Length: 29 pages
Date of creation: Sep 2005
Date of revision:
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-12-20 (All new papers)
- NEP-GEO-2005-12-20 (Economic Geography)
- NEP-PBE-2005-12-20 (Public Economics)
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