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‘Shall Become Exclusive:’ An Economic Analysis of Section 90

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  • PERRY SHAPIRO
  • JEFFREY PETCHEY

Abstract

Section 90 of the Constitution gave the power to impose excise duties exclusively to the Commonwealth. Sometimes it is argued that the Founders were motivated by a concern to ensure free interstate trade. We show that Section 90 may have reduced interstate trade distortions but equally it may have increased them and created a large excise revenue surplus for the Commonwealth. There is, therefore, a case for giving excise tax powers back to the States and allowing them to cooperate through an interstate compact. There may be a role for the Commonwealth in monitoring and enforcing such a compact.

Suggested Citation

  • Perry Shapiro & Jeffrey Petchey, 1994. "‘Shall Become Exclusive:’ An Economic Analysis of Section 90," The Economic Record, The Economic Society of Australia, vol. 70(209), pages 171-182, June.
    • Handle: RePEc:bla:ecorec:v:70:y:1994:i:209:p:171-182
    DOI: 10.1111/j.1475-4932.1994.tb01836.x
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    References listed on IDEAS

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    1. Brennan,Geoffrey & Buchanan,James M., 2006. "The Power to Tax," Cambridge Books, Cambridge University Press, number 9780521027922.
    2. Wildasin, David E., 1988. "Nash equilibria in models of fiscal competition," Journal of Public Economics, Elsevier, vol. 35(2), pages 229-240, March.
    3. Jack Mintz & Henry Tulkens, 2006. "Commodity Tax Competition Between Member States of a Federation: Equilibrium and Efficiency," Springer Books, in: Parkash Chander & Jacques Drèze & C. Knox Lovell & Jack Mintz (ed.), Public goods, environmental externalities and fiscal competition, chapter 0, pages 449-489, Springer.
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    Cited by:

    1. Jeffrey Petchey & Perry Shapiro, 2000. "The Efficiency of State Taxes on Mobile Labour Income," The Economic Record, The Economic Society of Australia, vol. 76(234), pages 285-296, September.

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