Tying governments' hands in commodity taxation

Tying governments' hands in commodity taxation

In the 1970s, taxation of "windfall" profits from primary products and intervention in trade and production tempted governments into expansionary fiscal policies, whilst stifling the private sector and depressing growth. However, the experience of the recent coffee boom has so far been more favourable: those African countries which liberalized and left a large share of the “windfall” with the p...

Inflation and Taxation with Optimizing Governments

This paper examines the empirical validity of the prediction that if governments minimize the deadweight loss from raising revenue through inflation and tax finance, there should be a positive contemporaneous association between inflation and the level of tax burdens. We examine the empirical validity of this prediction using data from Britain, France, Germany, Japan, and the United States. Inf...

International Commodity Taxation under Monopolistic Competition International Commodity Taxation under Monopolistic Competition *

We analyze non-cooperative commodity taxation in a symmetric twocountry trade model characterized by monopolistic competition and international firm and capital mobility. In this setting, taxes in one country affect foreign welfare through the relocation of mobile firms and through changes in the rents accruing to capital owners. With consumption-based taxation, these fiscal externalities exact...

A New Approach to Optimal Commodity Taxation

This paper makes a fresh attempt at characterizing optimal commodity taxes. Under the usual assumptions, an extremely simple expression of second-best commodity taxes is derived, showing tax rates as functions of observable variables only, rather than as functions of unobservable variables such as compensated cross elasticities. The main formula is independent of special preferences, and indepe...

Optimal commodity taxation for reduction of envy