The Marginal Cost of Public Funds for Excise Taxes in Thailand

Worawan Chandoevwit and Bev Dahlby
Authors registered in the RePEc Author Service: Bev Dahlby ()

Taxation from ATAX, University of New South Wales

Abstract: The authors extend the Ahmad and Stern (1984) framework for calculating the marginal cost of public funds (MCF) for excise taxes in Thailand by incorporating non-tax distortions caused by (a) environmental externalities, (b) public expenditure externalities, (c) market power in setting prices, (d) addiction, and (e) smuggling or tax evasion. Our calculations, based on our benchmark parameter values, indicates that the MCFs are 0.532 for fuel excise taxes, 2.187 for tobacco excise taxes, 2.132 for alcohol excise taxes and 1.080 for the VAT. Using pro-poor distributional weights does not change the relative social marginal cost of raising revenues through the excise taxes.

Keywords: marginal cost of public funds; excise taxes; tax reform; excess burden (search for similar items in EconPapers)
Pages: 34 pages
Date: 2007-07-05
New Economics Papers: this item is included in nep-pbe, nep-pub and nep-sea
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