IDEAS home Printed from https://ideas.repec.org/p/cde/cdewps/02.html

Optimal Taxation And Resource Transfers In A Federal Nation

Author

Listed:
  • M.N. Murty

    (Institute of Economic Growth)

  • Ranjan Ray Author-Workplace-Delhi School of Economics

Abstract

This paper analyses optimal commodity taxes in a federal nation under alternative models of fiscal federalism, namely, fully coordinated and non-co-operative fiscal behaviour of the federal and provincial authorities. Illustrative calculations for India confirm sensitivity of optimal commodity taxes to federal specification. The paper, then, extends the non-co-operative model to allow resource transfer from the Centre to the provinces. The paper also proposes computational procedures to estimate the federal and provincial components of optimal commodity tax. Illustrative empirical evidence suggests considerable potential for these procedures in future numerical applications.

Suggested Citation

  • M.N. Murty & Ranjan Ray Author-Workplace-Delhi School of Economics, 1994. "Optimal Taxation And Resource Transfers In A Federal Nation," Working papers 02, Centre for Development Economics, Delhi School of Economics.
    • Handle: RePEc:cde:cdewps:02
    as

    Download full text from publisher

    File URL: http://www.cdedse.org/pdf/work2.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Diamond, Peter A & Mirrlees, James A, 1971. "Optimal Taxation and Public Production II: Tax Rules," American Economic Review, American Economic Association, vol. 61(3), pages 261-278, June.
    2. Roger H. Gordon, 1983. "An Optimal Taxation Approach to Fiscal Federalism," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 98(4), pages 567-586.
    3. Diamond, Peter A & Mirrlees, James A, 1971. "Optimal Taxation and Public Production: I--Production Efficiency," American Economic Review, American Economic Association, vol. 61(1), pages 8-27, March.
    4. Ahmad, Ehtisham & Stern, Nicholas, 1984. "The theory of reform and indian indirect taxes," Journal of Public Economics, Elsevier, vol. 25(3), pages 259-298, December.
    5. repec:bla:scandj:v:91:y:1989:i:4:p:655-70 is not listed on IDEAS
    6. Arnott, Richard & Grieson, Ronald E., 1981. "Optimal fiscal policy for a state or local government," Journal of Urban Economics, Elsevier, vol. 9(1), pages 23-48, January.
    7. Ray, Ranjan, 1986. "Sensitivity of `optimal' commodity tax rates to alternative demand functional forms : An econometric case study of India," Journal of Public Economics, Elsevier, vol. 31(2), pages 253-268, November.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hoyt, William H., 2001. "Tax Policy Coordination, Vertical Externalities, and Optimal Taxation in a System of Hierarchical Governments," Journal of Urban Economics, Elsevier, vol. 50(3), pages 491-516, November.
    2. David Madden & Michael Savage, 2020. "Which households matter most? Capturing equity considerations in tax reform via generalised social marginal welfare weights," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 27(1), pages 153-193, February.
    3. David (David Patrick) Madden & Michael Savage, 2015. "Which Households Matter Most? Capturing Equity Considerations in Tax Reform via Generalised Social Marginal Welfare Weights," Working Papers 201502, School of Economics, University College Dublin.
    4. Ray, Ranjan, 1993. "Optimal Demogrants and Taxes in a Federal Welfare State," Journal of Population Economics, Springer;European Society for Population Economics, vol. 6(3), pages 199-214.
    5. Kakwani, Nanak & Ray, Ranjan, 1989. "Optimal commodity taxes under rationing," Policy Research Working Paper Series 203, The World Bank.
    6. W. Krelle & H. Siebert & P. Schönfeld & R. Gradus & D. Wildasin & J. Weymark & G. Tullock & C. Keuschnigg & A. Endres & R. Schwarze & U. Kamecke & A. Wellink, 1990. "Book reviews," Journal of Economics, Springer, vol. 52(3), pages 295-326, October.
    7. Mickaël Beaud & Thierry Blayac & Patrice Bougette & Soufiane Khoudmi & Philippe Mahenc & Stéphane Mussard, 2013. "Estimation du coût d'opportunité des fonds publics pour l'économie française," Working Papers halshs-01077141, HAL.
    8. Gordon, Roger H. & Hines, James Jr, 2002. "International taxation," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 4, chapter 28, pages 1935-1995, Elsevier.
    9. Sushama Murty, 2019. "Some results from the theory of optimal taxation and their relevance for increasing the progressiveness of Indian tax structure," Indian Economic Review, Springer, vol. 54(1), pages 19-50, June.
    10. Gordon, Roger H, 1992. "Can Capital Income Taxes Survive in Open Economies?," Journal of Finance, American Finance Association, vol. 47(3), pages 1159-1180, July.
    11. Andrej Cupák & Peter Tóth, 2017. "Measuring the Efficiency of VAT reforms: Evidence from Slovakia," Working and Discussion Papers WP 6/2017, Research Department, National Bank of Slovakia.
    12. Michael Smart, 2012. "Departures from Neutrality in Canada's Goods and Services Tax," SPP Research Papers, The School of Public Policy, University of Calgary, vol. 5(5), February.
    13. Peter Tóth & Andrej Cupák & Marian Rizov, 2021. "Measuring the efficiency of VAT reforms: a demand system simulation approach," Oxford Economic Papers, Oxford University Press, vol. 73(3), pages 1218-1243.
    14. Ray, R., 1994. "The Reform and Design of Commodity Taxes in the Presence of Tax Evasion with Illustrative Evidence from India," Discussion Paper 1994-108, Tilburg University, Center for Economic Research.
    15. Koffie Ben Nassar, 2008. "Corporate Income Tax Competition in the Caribbean," IMF Working Papers 2008/077, International Monetary Fund.
    16. Valentini, Edilio, 2015. "Indirect taxation, public pricing and price cap regulation: A synthesis," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy, vol. 9, pages 1-39.
    17. Odd E. Nygård & John T. Revesz, 2015. "Optimal indirect taxation and the uniformity debate: A review of theoretical results and empirical contributions," Discussion Papers 809, Statistics Norway, Research Department.
    18. Stéphane Gauthier & Fanny Henriet, 2023. "Targeting Taxes on Local Externalities," Annals of Economics and Statistics, GENES, issue 151, pages 1-36.
    19. Gemmell, Norman, 2021. "Economic Lessons for Tax Policy Advisers," Working Paper Series 21109, Victoria University of Wellington, Chair in Public Finance.
    20. Gemmell, Norman, 2021. "Economic Lessons for Tax Policy Advisers," Working Paper Series 9463, Victoria University of Wellington, Chair in Public Finance.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cde:cdewps:02. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sanjeev Sharma (email available below). General contact details of provider: https://edirc.repec.org/data/cdudein.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.