Using the Canadian National Population Health Survey and the recent tax variation across Canadian provinces, this paper examines the impact of cigarette taxes on smoking participation. Consistent with the literature, we find evidence of a heterogeneous response to cigarette taxes among different groups of smokers. Contrary to most studies, we find that the middle age group-which constitutes the...

The use of environmental taxes and charges in OECD countries increased by over 50% between 1987 and 1994. While revenues raised by environmental taxes and charges remain small relative to overall taxation, they comprise a rising proportion in most European countries. Several European countries have either undertaken or are considering systematic shifts in taxes away from labour and onto the use...

In 2000 the price of crude oil rose to levels not seen for more than 20 years, and as a result so did the price of oil products. The price hikes prompted public debate about the level of taxes determining the final prices paid by consumers. By one estimate, taxes accounted for 68 percent of the final price in the European Union in 2000 (OPEC 2000). But what about developing countries, where pet...

Applying a framework of perfect competition under uncertainty, we contribute to the discussion of whether or not ad valorem taxes and specific taxes are equivalent. While this equivalence holds without price uncertainty, we show that ad valorem taxes and specific taxes are “almost never” equivalent in the presence of uncertainty if we demand equivalence to hold pathwise. Since we obtain this re...

We examine the impact of abatement taxes on the pollution level in a duopoly framework with endogenous market structure. We demonstrate that an increase in abatement taxes could trigger a regime-switch from joint ventures to Cournot competition, causing the pollution level to increase. Moreover, abatement taxes can implement the first best outcome if and only if the industry is not too pollutin...

This paper analyzes optimal linear taxes on labor income and savings in a twoperiod life-cycle model with ex ante identical households, endogenous leisure demands in both periods, and general processes of skill shocks over the life cycle. We demonstrate that the Atkinson-Stiglitz theorem breaks down under risk. Capital taxes are employed besides labor income taxes for two distinct reasons: i) c...

International markets for tradable emission permits (TEP) co-exist with national energy taxation. A firm trading emission permits in the international market also pays energy taxes in its host country, thus creating an interaction between the international TEP-market and national energy taxes. In this paper we model that interaction in a framework of a perfectly competitive international TEP-ma...

This paper estimates the political costs of increasing taxes and cutting expenditures for members of a legislature. It is found that both costs are individually significant, but that they are not significantly different. This coincides with the first order condition for maximization of the probability of reelection. Republican legislatures have a higher political cost for taxes, thus the party’...

The past academic literature on tax policy has focused almost entirely on the analysis of tax structures in the richest countries, particularly the U.S. Overall the optimal tax models explain reasonably well the observed tax policies in these countries. As summarized in Gordon (2000), for example, past theoretical work suggests that taxes on consumption or labor income should dominate use of ca...