Domestic and Trade Tax Reforms in the Presence of a Public Good and Different Neutrality Conditions

Michael Michael, Sajal Lahiri and Panos Hatzipanayotou

University of Cyprus Working Papers in Economics from University of Cyprus Department of Economics

Abstract: This paper develops a perfectly-competitive general-equilibrium model of a small open economy with production of private traded goods and of a public good which is financed by revenues from trade and domestic taxes. Within this framework we consider the effects on public good provision and on welfare of the following tax reforms: (i) a producer-price-neutral reduction in export taxes and a corresponding increase in production taxes, (ii) a consumer-price-neutral reduction in tariffs and a corresponding increase in consumption taxes, and (iii) a partial tax-revenue-neutral reform in trade and domestic taxes.

Keywords: Indirect tax reforms; Government tax revenue; Public good; Welfare (search for similar items in EconPapers)
Pages: 25 pages
Date: 2011-01
New Economics Papers: this item is included in nep-int and nep-pbe
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Persistent link: https://EconPapers.repec.org/RePEc:ucy:cypeua:04-2011

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