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A Trade-off Between Efficiency and Equity in Adopting Differential Rates to the Consumption Tax (in Japanese)

Author

Listed:
  • Tomohiro Murasawa
  • Michio Yuda
  • Yasushi Iwamoto

Abstract

We conducted a simulation study in which the outcome of a tax reform plan was evaluated from the viewpoint of social welfare. We first compared two tax reform plans that generated an equivalent amount of revenue; one raised the consumption tax to a uniform 10 percent, and the other introduced differential rates. The latter plan achieved higher welfare when the social welfare function was utilitarian. However, when the tax increase grew, not using differential rates achieved higher welfare with a relatively small degree of inequality aversion.

Suggested Citation

  • Tomohiro Murasawa & Michio Yuda & Yasushi Iwamoto, 2005. "A Trade-off Between Efficiency and Equity in Adopting Differential Rates to the Consumption Tax (in Japanese)," Economic Analysis, Economic and Social Research Institute (ESRI), vol. 176, pages 21-38, June.
    • Handle: RePEc:esj:esriea:176b
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    File URL: http://www.esri.go.jp/jp/archive/bun/bun176/bun176e.pdf
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    Cited by:

    1. Toshiyuki Uemura & Yoshimi Adachi & Yurie Saitoh, 2016. "Measuring The Burden Of Indirect Taxation Including Consumption Tax In Japan By Income Group," Discussion Paper Series 141, School of Economics, Kwansei Gakuin University, revised Mar 2016.

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