NON-UNIFORM CONSUMPTION TAXES: A ‘BLUNT REDISTRIBUTIVE INSTRUMENT’?

Abstract

This paper examines the question of the extent to which redistribution can be achieved using a structure of consumption taxes with differential rates and exemptions. A local measure of progression, that of liability progression (equivalent to the revenue elasticity) is examined. Results are obtained for the Australian indirect tax structure. These are compared with structures in which only commodity groups with total expenditure elasticities greater than 1 are taxed. Comparisons are also made using equivalent variations, and inequality measures of a money metric welfare measure are reported.

Citation

Creedy, J. (2003), "NON-UNIFORM CONSUMPTION TAXES: A ‘BLUNT REDISTRIBUTIVE INSTRUMENT’?", Amiel, Y. and Bishop, J.A. (Ed.) Fiscal Policy, Inequality and Welfare (Research on Economic Inequality, Vol. 10), Emerald Group Publishing Limited, Leeds, pp. 1-19. https://doi.org/10.1016/S1049-2585(03)10001-4