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Optimal commodity taxation and consumer welfare: an empirical application to the UAE


  • Azzeddine Azzam
  • Belaid Rettab


We compute the optimal commodity tax rates and compare their associated welfare impact with the welfare impact of a uniform tax rate on UAE households with and without exempting food. Household data is used within a linear expenditure system that considers joint allocation of leisure and seven broad commodity groups. We find that households are worse off with a uniform tax when food is not taxed.

Suggested Citation

  • Azzeddine Azzam & Belaid Rettab, 2015. "Optimal commodity taxation and consumer welfare: an empirical application to the UAE," International Journal of Economic Policy in Emerging Economies, Inderscience Enterprises Ltd, vol. 8(3), pages 191-212.
  • Handle: RePEc:ids:ijepee:v:8:y:2015:i:3:p:191-212

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