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Impact of VAT Exemptions in the Postal Sector on Competition and Welfare

Author

Listed:
  • Helmut Dietl

    (Institute for Strategy and Business Economics, University of Zurich)

  • Christian Jaag

    (Institute of Public Finance and Fiscal Law, University of St. Gallen)

  • Markus Lang

    (Institute for Strategy and Business Economics, University of Zurich)

  • Martin Lutzenberger

    (Lucerne University of Applied Sciences)

  • Urs Trinkner

    (Institute for Strategy and Business Economics, University of Zurich)

Abstract

In most member states of the European Union (EU), universal postal services provided by the incumbent operator are exempt from value added taxes (VAT) on the grounds that they are the Òpublic postal service.Ó Other postal service providers have to charge VAT at the standard rate. The paper sheds light on the main competitive impact of VAT policies while showing the consequences on overall welfare. We show that the results are very sensitive to the operatorsÕ labor policies. Consequently, VAT exemptions have a different impact in countries with different labor regulations. The comprehensive treatment of competition and welfare enables us to provide guidance on how to resolve the policy trade-off between consumer surplus, government tax revenue, and a level playing field in liberalized postal markets.

Suggested Citation

  • Helmut Dietl & Christian Jaag & Markus Lang & Martin Lutzenberger & Urs Trinkner, 2010. "Impact of VAT Exemptions in the Postal Sector on Competition and Welfare," Working Papers 0145, University of Zurich, Institute for Strategy and Business Economics (ISU).
    • Handle: RePEc:iso:wpaper:0145
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    File URL: http://repec.business.uzh.ch/RePEc/iso/ISU_WPS/145_ISU_full.pdf
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    References listed on IDEAS

    as
    1. De Donder Philippe & Cremer Helmuth & Dudley Paul & Rodriguez Frank, 2009. "On the Value Added Taxation Status of National Postal Operators," Review of Network Economics, De Gruyter, vol. 8(3), pages 1-22, September.
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    Cited by:

    1. Christian Jaag & Urs Trinkner & Jeffrey Yusof, 2014. "Assessment of EU Postal Sector Policy during the Second Barroso Administration (2010-2014)," Working Papers 0050, Swiss Economics.
    2. Christian Jaag, 2010. "Bestimmungsfaktoren für die Wettbewerbsentwicklung in Briefmärkten," Economics Musings 0001, Swiss Economics.
    3. Dietl Helmut M & Jaag Christian & Lang Markus & Trinkner Urs W.O., 2011. "Competition and Welfare Effects of VAT Exemptions," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 11(1), pages 1-29, April.
    4. Jaag, Christian, 2014. "Postal-sector policy: From monopoly to regulated competition and beyond," Utilities Policy, Elsevier, vol. 31(C), pages 266-277.

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    1. Dietl Helmut M & Jaag Christian & Lang Markus & Trinkner Urs W.O., 2011. "Competition and Welfare Effects of VAT Exemptions," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 11(1), pages 1-29, April.

    More about this item

    Keywords

    Value-added tax; indirect taxation; tax regulation; tax exemption; universal service obligation; postal sector;
    All these keywords.

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L87 - Industrial Organization - - Industry Studies: Services - - - Postal and Delivery Services

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