Does indirect tax harmonization deliver pareto improvements in the presence of global public goods?

Arbeitspapier

This paper identifies conditions under which, starting from any tax distorting equilibrium, destination- and origin-based indirect tax-harmonizing reforms are potentially Pareto improving in the presence of global public goods. The first condition (unrequited transfers between governments) requires that transfers are designed in such a way that the marginal valuations of the global public goods are equalized, whereas the second (conditional revenue changes) requires that the change in global tax revenues, as a consequence of tax harmonization, is consistent with the direction of inefficiency in global public good provision relative to the (modified) Samuelson rule. Under these conditions, tax harmonization results in redistributing the gains from a reduction in global deadweight loss and any changes in global tax revenues according to the Pareto principle. And this is the case independently of the tax principle in place (destination or origin).

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 2668

Classification and Topics

• Classification: Wirtschaft ; Economic Integration ; Taxation and Subsidies: Efficiency; Optimal Taxation ; Public Goods ; International Fiscal Issues; International Public Goods
• Subject: origin principle ; destination principle ; indirect tax harmonization ; reform of commodity taxes ; global/local public goods ; Indirekte Steuer ; Verbrauchsteuer ; Steuerharmonisierung ; Bestimmungslandprinzip ; Öffentliches Gut ; Pareto-Optimum ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Karakosta, Ourania ; Kotsogiannis, Christos ; Lopez-Garcia, Miguel-Angel
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2009

Further information

• Handle: http://hdl.handle.net/10419/30427
• Last update: 10.03.2025, 11:44 AM CET