Premium
Optimal Commodity Taxes in Australia
Author(s) -
Blacklow Paul,
Ray Ranjan
Publication year - 2002
Publication title -
australian economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.308
H-Index - 29
eISSN - 1467-8462
pISSN - 0004-9018
DOI - 10.1111/1467-8462.00222
Subject(s) - commodity , economics , tax deferral , point (geometry) , inequality , microeconomics , planner , monetary economics , public economics , tax reform , finance , state income tax , mathematics , computer science , gross income , mathematical analysis , geometry , programming language
The recent changes to commodity taxes in Australia have led to renewed interest in a classic question in public finance: should the tax rates be uniform or differentiated? This article attempts to answer this question by calculating optimal commodity taxes in Australia for a nine‐item disaggregation. The estimates point to non‐uniform commodity taxes, even from the viewpoint of an inequality‐insensitive tax planner. The optimal commodity taxes bear little resemblance with the pre‐GST or post‐GST tax rates. No less significant is our observation that even the purely efficiency‐driven optimal commodity taxes imply lower real expenditure inequality than the actual taxes.