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Excise Taxation in New Zealand

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  • John Creedy
  • Catherine Sleeman

Abstract

In New Zealand, excise taxes are levied on three commodity groups: alcohol, tobacco and petrol. The 2001 Tax Review, published by the New Zealand Treasury, argued that excises are inequitable and inefficient, and advised that these taxes should be removed and the revenue replaced by raising the standard rate of GST. This paper provides an empirical examination of these issues. First, the efficiency of New Zealand’s current system of indirect taxes is examined. The welfare and redistributive effects resulting from the revenue-neutral removal of excise taxes are then examined. Welfare and redistributive measures are computed for a range of demographic groups and total weekly expenditure levels. While the largest efficiency gains and reductions in inequality are observed for households with at least one smoker, the overall distributional implications of the proposed reforms are found to be small.

Suggested Citation

  • John Creedy & Catherine Sleeman, 2005. "Excise Taxation in New Zealand," Department of Economics - Working Papers Series 929, The University of Melbourne.
    • Handle: RePEc:mlb:wpaper:929
    Note: This paper has now been published in: Creedy, J. and Sleeman, C. (2005) Excise Taxation in New Zealand, New Zealand Economic Papers, 39, no.1, pp. 1-35.
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    File URL: http://www.economics.unimelb.edu.au/downloads/wpapers-05/929.pdf
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    References listed on IDEAS

    as
    1. John Creedy, 1998. "Measuring Welfare Changes and Tax Burdens," Books, Edward Elgar Publishing, number 1579.
    2. Ebert, Udo, 1997. "Social Welfare When Needs Differ: An Axiomatic Approach," Economica, London School of Economics and Political Science, vol. 64(254), pages 233-244, May.
    3. John Creedy & Catherine Sleeman, 2004. "Adult Equivalence Scales, Inequality and Poverty in New Zealand," Treasury Working Paper Series 04/21, New Zealand Treasury.
    4. John Creedy, 1998. "Measuring the Welfare Effects of Price Changes: A Convenient Parametric Approach," Australian Economic Papers, Wiley Blackwell, vol. 37(2), pages 137-151, June.
    5. Felicity Barker, 2002. "Consumption Externalities and the Role of Government: The Case of Alcohol," Treasury Working Paper Series 02/25, New Zealand Treasury.
    6. Creedy, John, 1998. "Measuring the Welfare Effects of Price Changes: A Convenient Parametric Approach," Australian Economic Papers, Wiley Blackwell, vol. 37(2), pages 137-151, June.
    7. Jenkins, Stephen P & Cowell, Frank A, 1994. "Parametric Equivalence Scales and Scale Relativities," Economic Journal, Royal Economic Society, vol. 104(425), pages 891-900, July.
    8. Yoram Amiel & John Creedy & Stan Hurn, 1999. "Measuring Attitudes Towards Inequality," Scandinavian Journal of Economics, Wiley Blackwell, vol. 101(1), pages 83-96, March.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. John Creedy & Catherine Sleeman, 2006. "Indirect Taxation and Progressivity: Revenue and Welfare Changes," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 62(1), pages 50-67, March.
    2. John Creedy, 2017. "The Optimal Threshold for GST on Imported Goods," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 50(2), pages 169-180, June.
    3. John Creedy & Penny Mok, 2018. "The marginal welfare cost of personal income taxation in New Zealand," New Zealand Economic Papers, Taylor & Francis Journals, vol. 52(3), pages 323-338, September.
    4. John Creedy & Penny Mok, 2018. "The marginal welfare cost of personal income taxation in New Zealand," New Zealand Economic Papers, Taylor & Francis Journals, vol. 52(3), pages 323-338, September.

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    More about this item

    Keywords

    Indirect taxation; equivalent variations; excess burdens; inequality; tax reform;
    All these keywords.

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household

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