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Theory and Policy: A Comment on Dixit and on Current Tax Theory

Author

Listed:
  • Vito Tanzi

    (International Monetary Fund)

Abstract

In a recent paper Avinash Dixit criticized the argument that when collection lags characterize tax systems, recourse to inflationary finance should be minimized. He argued that, in such cases, rather than minimizing recourse to inflationary finance, the rates of the commodity taxes should be adjusted to maintain them at an optimal level and, thus, to minimize welfare cost. This paper shows that the requirements for following Dixit's policy prescription are almost impossible to meet. The paper argues that tax theorists should pay more attention to the constraints under which tax reforms are made.

Suggested Citation

  • Vito Tanzi, 1992. "Theory and Policy: A Comment on Dixit and on Current Tax Theory," IMF Staff Papers, Palgrave Macmillan, vol. 39(4), pages 957-966, December.
    • Handle: RePEc:pal:imfstp:v:39:y:1992:i:4:p:957-966
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    Citations

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    Cited by:

    1. Isaac K. Ofori & Pamela E. Ofori & Simplice A. Asongu, 2021. "Towards Efforts to Enhance Tax Revenue Mobilisation in Africa: Exploring Synergies between Industrialisation and ICTs," Research Africa Network Working Papers 21/058, Research Africa Network (RAN).
    2. Wojciech Kopczuk & Justin Marion & Erich Muehlegger & Joel Slemrod, 2016. "Does Tax-Collection Invariance Hold? Evasion and the Pass-Through of State Diesel Taxes," American Economic Journal: Economic Policy, American Economic Association, vol. 8(2), pages 251-286, May.
    3. Don Fullerton & Erich Muehlegger, 2017. "Who Bears the Economic Costs of Environmental Regulations?," CESifo Working Paper Series 6596, CESifo.
    4. Kalina Koleva, 2005. "Seeking for an optimal tax administration: the efficiency costs’ approach [A la recherche de l'administration fiscale optimale : l'approche par les coûts d'efficience]," Post-Print halshs-00195354, HAL.
    5. Battilossi, Stefano, 2003. "Capital mobility and financial repression in Italy, 1960-1990 : a public finance perspective," IFCS - Working Papers in Economic History.WH wh030602, Universidad Carlos III de Madrid. Instituto Figuerola.
    6. Pamela E. Ofori & Isaac K. Ofori & Simplice A. Asongu, 2022. "Towards efforts to enhance tax revenue mobilisation in Africa: Exploring the interaction between industrialisation and digital infrastructure," Working Papers of the African Governance and Development Institute. 22/045, African Governance and Development Institute..
    7. Hassan, Fareed M. A., 1998. "Revenue-productive income tax structures and tax reforms in emerging market economies - evidence from Bulgaria," Policy Research Working Paper Series 1927, The World Bank.

    More about this item

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies

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