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The National and Regional Consequences of Australia's Goods and Services Tax

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  • James A. Giesecke
  • Nhi H. Tran

Abstract

The major political parties support the tenet of the original GST agreement that GST change requires unanimous state approval. However, GST change could differentially affect state economies, and thus influence support from individual states. We investigate the potential for GST change to differentially affect state economies. We do this by developing a multi‐regional model of the Australian economy that contains details of the legislated features of the GST. In this model, when we change any element of the GST, the economic effects are informed by regional differences in economic structure and their interactions with the details of our GST theory.

Suggested Citation

  • James A. Giesecke & Nhi H. Tran, 2018. "The National and Regional Consequences of Australia's Goods and Services Tax," The Economic Record, The Economic Society of Australia, vol. 94(306), pages 255-275, September.
  • Handle: RePEc:bla:ecorec:v:94:y:2018:i:306:p:255-275
    DOI: 10.1111/1475-4932.12419
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    File URL: https://doi.org/10.1111/1475-4932.12419
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    References listed on IDEAS

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    1. Peter B. Dixon & Maureen T. Rimmer, 1999. "Changes in Indirect Taxes in Australia: A Dynamic General Equilibrium Analysis," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 32(4), pages 327-348, December.
    2. James Giesecke & Nhi Hoang Tran, 2012. "A general framework for measuring VAT compliance rates," Applied Economics, Taylor & Francis Journals, vol. 44(15), pages 1867-1889, May.
    3. Giesecke, James A. & Madden, John R., 2013. "Regional Computable General Equilibrium Modeling," Handbook of Computable General Equilibrium Modeling, in: Peter B. Dixon & Dale Jorgenson (ed.), Handbook of Computable General Equilibrium Modeling, edition 1, volume 1, chapter 0, pages 379-475, Elsevier.
    4. Gottfried, Peter & Wiegard, Wolfgang, 1991. "Exemption versus zero rating : A hidden problem of VAT," Journal of Public Economics, Elsevier, vol. 46(3), pages 307-328, December.
    5. Fan Zhai & Jianwu He, 2008. "Supply-side Economics in the People's Republic of China's Regional Context: A Quantitative Investigation of Its VAT Reform," Asian Economic Papers, MIT Press, vol. 7(2), pages 96-121, Spring/Su.
    6. Kehoe, Timothy J. & Noyola, Pedro Javier & Manresa, Antonio & Polo, Clemente & Sancho, Ferran, 1988. "A general equilibrium analysis of the 1986 tax reform in Spain," European Economic Review, Elsevier, vol. 32(2-3), pages 334-342, March.
    7. Philip Adams & Janine Dixon & Mark Horridge, 2015. "The Victoria University Regional Model (VURM): Technical Documentation, Version 1.0," Centre of Policy Studies/IMPACT Centre Working Papers g-254, Victoria University, Centre of Policy Studies/IMPACT Centre.
    8. Giesecke, James A. & Nhi, Tran Hoang, 2010. "Modelling value-added tax in the presence of multi-production and differentiated exemptions," Journal of Asian Economics, Elsevier, vol. 21(2), pages 156-173, April.
    9. James Giesecke & Peter B. Dixon & Maureen T. Rimmer, 2008. "Regional macroeconomic outcomes under alternative arrangements for the financing of public infrastructure," Papers in Regional Science, Wiley Blackwell, vol. 87(1), pages 3-31, March.
    10. Lourenço S. Paz, 2015. "The welfare impacts of a revenue-neutral switch from tariffs to VAT with intermediate inputs and a VAT threshold," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 24(4), pages 465-498, June.
    11. Stephen Marks, 2005. "Proposed changes to the value added tax: implications for tax revenue and price distortions," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 41(1), pages 81-95.
    12. Toh, Mun-Heng & Lin, Qian, 2005. "An evaluation of the 1994 tax reform in China using a general equilibrium model," China Economic Review, Elsevier, vol. 16(3), pages 246-270.
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    Cited by:

    1. Jason Nassios & John Madden & James Giesecke & Janine Dixon & Nhi Tran & Peter Dixon & Maureen Rimmer & Philip Adams & John Freebairn, 2019. "The economic impact and efficiency of state and federal taxes in Australia," Centre of Policy Studies/IMPACT Centre Working Papers g-289, Victoria University, Centre of Policy Studies/IMPACT Centre.
    2. repec:eee:ecmode:v:81:y:2019:i:c:p:111-123 is not listed on IDEAS

    More about this item

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects
    • R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies
    • D57 - Microeconomics - - General Equilibrium and Disequilibrium - - - Input-Output Tables and Analysis

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