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GST Reform in Australia: Implications of Estimating Price Elasticities of Demand for Food

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  • Syed Hasan
  • Mathias Sinning

Abstract

This paper uses detailed information about household supermarket purchases from the Australian Nielsen Homescan Survey to estimate price elasticities of demand for a range of food categories. An instrumental variable strategy is employed to address endogeneity issues. The estimates obtained from our analysis are used to study five scenarios in which the rate of the goods and services tax (GST) on food categories is increased or in which the tax base is broadened to include currently GST‐free categories. Our findings reveal that there is considerable scope for raising revenue by increasing the rate and broadening the tax base.

Suggested Citation

  • Syed Hasan & Mathias Sinning, 2018. "GST Reform in Australia: Implications of Estimating Price Elasticities of Demand for Food," The Economic Record, The Economic Society of Australia, vol. 94(306), pages 239-254, September.
    • Handle: RePEc:bla:ecorec:v:94:y:2018:i:306:p:239-254
    DOI: 10.1111/1475-4932.12412
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    Cited by:

    1. Hasan, Syed & Shakur, Shamim & Breunig, Robert, 2021. "Exchange rates and expenditure of households with foreign-born members: Evidence from Australia," Journal of Economic Behavior & Organization, Elsevier, vol. 188(C), pages 977-997.
    2. Syed Hasan & Nazmun Ratna & Shamim Shakur, 2019. "Exchange rate, remittances and expenditure of foreign-bornhouseholds: evidence from Australia," Discussion Papers 1901, School of Economics and Finance, Massey University, New Zealand.
    3. Lorraine Conway & David Prentice, 2020. "How Much do Households Respond to Electricity Prices? Evidence from Australia and Abroad," Economic Papers, The Economic Society of Australia, vol. 39(3), pages 290-311, September.

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    More about this item

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D60 - Microeconomics - - Welfare Economics - - - General
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue

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