The origin principle and the welfare gains from indirect tax harmonization

López-García, Miguel-Ángel

doi:10.1007/bf00400149

Cited by 24 publications

(16 citation statements)

References 11 publications

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“…Finally, a third branch in the literature is concerned with tax rate harmonization when governments can levy differentiated taxes under either the origin or the destination principle. If competition in the goods market is perfect, and the government faces no revenue constraint, then an approximation of tax rates leads to aggregate welfare gains, as it improves exchange efficiency under the destination principle (Keen, 1987(Keen, , 1989 and production efficiency under the origin principle (Lopez-Garcia, 1996). The conditions for tax harmonization to constitute a Pareto improvement become much more stringent, however, when tax revenues are needed to finance a public good (Delipalla, 1997;Lockwood, 1997;Lahiri and Raimondos-Møller, 1998;Lopez-Garcia, 1998).…”

Section: Introductionmentioning

confidence: 99%

Tacit collusion and international commodity taxation

Haufler¹,

Schjelderup

2004

Journal of Public Economics

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The paper employs a model of dynamic price competition to study how international commodity taxation affects the stability of collusive agreements when producers in an international duopoly agree not to export into each other's home market. We consider both the choice of international tax principle and the harmonization of tax rates and differentiate between a setting where production costs differ between countries, and a setting where exogenous tax rate differentials are the only asymmetry. The conclusions derived from this model differ strongly from those obtained under the assumption of competitive product markets.

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Section: Introductionmentioning

confidence: 99%

Tacit collusion and international commodity taxation

Haufler¹,

Schjelderup

2004

Journal of Public Economics

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“…11 It is also worth noting that, following Lopez-Garcia (1996), one would expect equally that local supply responses (which would be the counterpart of the local demand responses that act as the weights to the taxes in the harmonizing reform in the destination principle) would appear here as the basis for tax harmonization. This, however, is not the case.…”

Section: Origin Principle Of Taxationmentioning

confidence: 99%

“…Keen (1987Keen ( , 1989 establishes that with perfectly competitive markets tax harmonization of destination-based taxes towards an appropriately weighted average leads to a potential Pareto improvement (with appropriate compensating payments all countries gain from such a reform). Lopez-Garcia (1996) verifies, too, that origin-based tax harmonization delivers Pareto improvements. The incorporation of public goods does not, of course, affect the desirability of tax harmonization but it does place a restriction on the set of initial tax vectors for which harmonization will lead to a Pareto improvement.…”

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confidence: 90%

Imperfect competition, indirect tax harmonization and public goods

Kotsogiannis

López-García

2007

Int Tax Public Finan

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This paper shows that the welfare implications of indirect tax harmonization in a two-country imperfectly competitive framework, are, in general, indeterminate in the presence of public goods: Both countries can be made either worse off or better off. This holds under both the destination and origin principles of taxation and is in sharp contrast to existing results where revenue effects are not present. A consequence of this indeterminacy is that a precise evaluation of tax-harmonizing policies under both tax regimes requires an explicit consideration of the underlying preferences for private and public goods as well as the oligopolistic sectors’ relative cost structures. Copyright Springer Science + Business Media, LLC 2007Origin principle, Destination principle, Indirect tax harmonization, Reform of commodity taxes, Public goods,

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“…Given A's tax rule (T g ; g ∈ G), the domestic tax base b, the domestic tax rate t, and the multiplier λ h are defined by (11), the budget constraint (9) at equality, and the first order condition…”

Section: Tax Competitionmentioning

confidence: 99%

Commodity Tax Competition with Constrained Taxes

Belan

Gauthier

2009

J Public Economic Theory

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This paper examines symmetric Nash equilibria of a two-country model of fiscal competition with a continuum of taxable commodities in each country. The innovation is to impose a uniformity restriction that there can be only two rates of tax on the different commodities, a positive rate and the zero-rate. The main results characterize, under two alternative modes of taxation, the equilibrium fiscal rules chosen by countries, i.e., the level of the positive rate and the set of taxed commodities. Under the origin principle, it appears that the equilibrium fiscal base is narrower than the optimal one, and consequently the tax rate is too high. By contrast, under the destination principle, the optimal rule is implemented.

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The origin principle and the welfare gains from indirect tax harmonization

Abstract: indirect tax harmonization, origin principle,

Cited by 24 publications

References 11 publications

Tacit collusion and international commodity taxation

Tacit collusion and international commodity taxation

Imperfect competition, indirect tax harmonization and public goods

Commodity Tax Competition with Constrained Taxes

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