The balance between specific and ad valorem taxation
A recurring issue in indirect tax design — most obviously, but not only, for goods traditionally subject to heavy excises — is the appropriate balance between specific and ad valorem taxation. Recent work has developed new perspectives on the issue, which is also one of the oldest in the formal study of public finance. This paper provides a broadly non-technical account of the central considerations that arise in choosing the balance between specific and ad valorem taxation, reviewing and somewhat extending the lessons of theory and experience. There emerge clear presumptions as to the relative effects of the two kinds of tax on such attributes as price, profits, product quality and variety. But the socially optimal balance between them is likely to be quite sensitive to the characteristics of the market at issue.
Volume (Year): 19 (1998)
Issue (Month): 1 (February)
|Contact details of provider:|| Postal: |
Phone: (+44) 020 7291 4800
Fax: (+44) 020 7323 4780
Web page: http://www.ifs.org.uk
More information through EDIRC
|Order Information:|| Postal: The Institute for Fiscal Studies 7 Ridgmount Street LONDON WC1E 7AE|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Cremer, Helmuth & Thisse, Jacques-Francois, 1994.
"Commodity Taxation in a Differentiated Oligopoly,"
International Economic Review,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 35(3), pages 613-33, August.
- CREMER, Helmut & THISSE, Jacques-FranÃ§ois, 1992. "Commodity taxation in a differentiated oligopoly," CORE Discussion Papers 1992035, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Cremer, H. & Thisse, J.-F., . "Commodity taxation in a differentiated oligopoly," CORE Discussion Papers RP 1112, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Cremer, Helmuth & Thisse, Jacques-François, 1993. "Commodity Taxation in a Differentiated Oligopoly," IDEI Working Papers 25, Institut d'Économie Industrielle (IDEI), Toulouse.
- Dickie, M. & Trandel, G.A., 1993. "Comparing Specific and Ad Vaslorem Pigouvian Taxes and Output Quotas," Papers 431, Georgia - College of Business Administration, Department of Economics.
- Myles, Gareth D, 1987. "Some Implications of Quality Differentials for Optimal Taxation," Economic Journal, Royal Economic Society, vol. 98(390), pages 148-60, Supplemen.
- R.W. Fraser, 1984.
"Commodity Taxes Under Uncertainty,"
Economics Discussion / Working Papers
84-09, The University of Western Australia, Department of Economics.
- Skeath, Susan E. & Trandel, Gregory A., 1994. "A Pareto comparison of ad valorem and unit taxes in noncompetitive environments," Journal of Public Economics, Elsevier, vol. 53(1), pages 53-71, January.
- Sumner, Michael, 1993. "Tax on Price: A Comment," Public Finance = Finances publiques, , vol. 48(2), pages 297-302.
- Besley, Timothy J. & Rosen, Harvey S., 1999.
"Sales Taxes and Prices: An Empirical Analysis,"
National Tax Journal,
National Tax Association, vol. 52(n. 2), pages 157-78, June.
- Paul Baker & Vanessa Brechling, 1992. "The impact of excise duty changes on retail prices in the UK," Fiscal Studies, Institute for Fiscal Studies, vol. 13(2), pages 48-65, January.
- Barzel, Yoram, 1976. "An Alternative Approach to the Analysis of Taxation," Journal of Political Economy, University of Chicago Press, vol. 84(6), pages 1177-97, December.
- Barnett, Paul G. & Keeler, Theodore E. & Hu, Teh-wei, 1995. "Oligopoly structure and the incidence of cigarette excise taxes," Journal of Public Economics, Elsevier, vol. 57(3), pages 457-470, July.
- Dixit, Avinash K & Stiglitz, Joseph E, 1977.
"Monopolistic Competition and Optimum Product Diversity,"
American Economic Review,
American Economic Association, vol. 67(3), pages 297-308, June.
- Dixit, Avinash K & Stiglitz, Joseph E, 1975. "Monopolistic Competition and Optimum Product Diversity," The Warwick Economics Research Paper Series (TWERPS) 64, University of Warwick, Department of Economics.
- Johnson, Terry R, 1978. "Additional Evidence on the Effects of Alternative Taxes on Cigarette Prices," Journal of Political Economy, University of Chicago Press, vol. 86(2), pages 325-28, April.
- Dierickx, I. & Matutes, C. & Neven, D., 1988. "Indirect taxation and cournot equilibrium," International Journal of Industrial Organization, Elsevier, vol. 6(3), pages 385-399.
- N. Gregory Mankiw & Michael D. Whinston, 1986. "Free Entry and Social Inefficiency," RAND Journal of Economics, The RAND Corporation, vol. 17(1), pages 48-58, Spring.
- Stern, Nicholas, 1987. "The effects of taxation, price control and government contracts in oligopoly and monopolistic competition," Journal of Public Economics, Elsevier, vol. 32(2), pages 133-158, March.
When requesting a correction, please mention this item's handle: RePEc:ifs:fistud:v:19:y:1998:i:1:p:1-37. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Benita Rajania)
If references are entirely missing, you can add them using this form.