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Cross-Border Shopping and the Sales Tax: A Reexamination of Food Purchases in West Virginia

Author

Listed:
  • Mark Skidmore

    () (Department of Economics, University of Wisconsin - Whitewater)

  • Mehmet Serkan Tosun

    () (Bureau of Business and Economic Research, College of Business and Economics, West Virginia University)

Abstract

In this paper we present new evidence of cross-border shopping in response to sales taxation. While several instructive studies provide estimates of the cross-border shopping effect, we utilize a unique opportunity to evaluate the effect of a large discrete change in sales tax policy. Using county level data on food income and sales tax data for West Virginia over the 1982-2000 period we estimate that for every one-percentage point increase in the county relative price ratio due to sales tax change, the per capita food income decreases by about 0.7 percent. Our estimates indicate that food sales fell in West Virginia border counties by about 4 percent as a result of the imposition of the 6 percent sales tax on food in 1989.

Suggested Citation

  • Mark Skidmore & Mehmet Serkan Tosun, 2005. "Cross-Border Shopping and the Sales Tax: A Reexamination of Food Purchases in West Virginia," Working Papers 05-07, UW-Whitewater, Department of Economics.
  • Handle: RePEc:uww:wpaper:05-07
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    References listed on IDEAS

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    1. Skidmore, Mark & Serkan Tosun, Mehmet, 2008. "Do New Lottery Games Stimulate Retail Activity? Evidence from West Virginia Counties," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 38(1).
    2. Garrett, Thomas A. & Marsh, Thomas L., 2002. "The revenue impacts of cross-border lottery shopping in the presence of spatial autocorrelation," Regional Science and Urban Economics, Elsevier, vol. 32(4), pages 501-519, July.
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    5. Austan Goolsbee, 2000. "In a World Without Borders: The Impact of Taxes on Internet Commerce," The Quarterly Journal of Economics, Oxford University Press, vol. 115(2), pages 561-576.
    6. Tosun, Mehmet Serkan & Skidmore, Mark, 2004. "Interstate Competition and State Lottery Revenues," National Tax Journal, National Tax Association;National Tax Journal, vol. 57(2), pages 163-178, June.
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    13. Ferris, J. Stephen, 2000. "The Determinants of Cross Border Shopping: Implications for Tax Revenues and Institutional Change," National Tax Journal, National Tax Association, vol. 53(n. 4), pages 801-24, December.
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    Cited by:

    1. Svante Karlsson & Urban Lindgren, 2011. "From Manufacturing to Retail? - Cross-Border Shopping and Economic Restructuring in West Sweden," ERSA conference papers ersa10p992, European Regional Science Association.

    More about this item

    JEL classification:

    • P25 - Economic Systems - - Socialist Systems and Transition Economies - - - Urban, Rural, and Regional Economics
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure

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