Leisure as a complement of banking: Taxing financial services for reducing leisure time?

Guillermo Peña

MPRA Paper from University Library of Munich, Germany

Abstract: Optimality of consumption taxes as VAT can be conditioned by the reduction of working time respect to leisure. Nonetheless, may we tax a good or service complementary to leisure? In this case, by applying the tax, the good itself would be discouraged, but also leisure at the same time. This paper theoretically discusses and analyzes the potential complementarity or neutrality of financial services regarding leisure time. A reduced general equilibrium model is developed, suggesting their complementarity. This is confirmed in the empirical section, where data from 30 OECD countries for 2018 is employed, obtaining that some financial indicators are usually complements of leisure, specifically for women, who are also sensitive in their leisure time to other fiscal and commercial variables. This show that the elimination of the exemption of financial services under VAT may discourage leisure hours, offsetting the discouragement of working hours by the general VAT.

Keywords: Leisure time; financial services; complementarity; financial VAT; optimal taxation (search for similar items in EconPapers)
JEL-codes: G21 H21 H25 J22 (search for similar items in EconPapers)
Date: 2021-09-27
New Economics Papers: this item is included in nep-acc and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/109942/1/MPRA_paper_109942.pdf original version (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:109942

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().