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Sin goods taxation: an encompassing model

Author

Listed:
  • Maria Alessandra Antonelli
  • Valeria De Bonis
  • Angelo Castaldo
  • Alessandrao Gandolfo

    (Università Sapienza di Roma - Dipartimento di Studi Giuridici ed Economici)

Abstract

We analyse optimal sin taxes. After identifying the distinctive features of sin goods, we develop a simple, encompassing framework that allows to treat the main models found in the literature as subcases. We derive the optimal sin tax rates, also considering the subsidisation of healthy goods. We then discuss the Pareto-improvement result obtained in the theoretical literature, confronting it with the debate on the regressivity of this kind of taxation. We highlight the crucial role of the interaction of tastes, self-control problems and poverty when deriving policy conclusions from theoretical models.

Suggested Citation

  • Maria Alessandra Antonelli & Valeria De Bonis & Angelo Castaldo & Alessandrao Gandolfo, 2022. "Sin goods taxation: an encompassing model," Public Finance Research Papers 52, Istituto di Economia e Finanza, DSGE, Sapienza University of Rome.
  • Handle: RePEc:gfe:pfrp00:00052
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    References listed on IDEAS

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    More about this item

    Keywords

    Sin goods; Optimal taxation; Tax burden; Consumer sovereignty.;
    All these keywords.

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory

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