An Empirical Analysis of the Effects of a Change in the Mix of Directand Indirect Taxation

Gerald Meagher ()

Australian Economic Papers, 1986, vol. 25, issue 46, 47-56

Abstract: This paper analyzes macroeconomic and structural effects of a change in the tax mix. Consumption taxes are increased and P AYE income taxes reduced so as to maintain the real value of total disposable in come. The analysis is conducted using an extended version of the ORANI multisectoral model of the Australian economy. The results indicate that, in the absence of a fall in post-tax real wages, the change in the tax mix will increase inflation, reduce employment, and push the balance of trade towards deficit. The changes will be greater the more the direct tax cuts are appropriated as increases in post-tax wages. Copyright 1986 by Blackwell Publishers Ltd/University of Adelaide and Flinders University of South Australia

Date: 1986
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Persistent link: https://EconPapers.repec.org/RePEc:bla:ausecp:v:25:y:1986:i:46:p:47-56

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