Local Sales Tax Options: A Case Study Of South Georgia

J. L. Love
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J. L. Love: Valdosta State College

The Review of Regional Studies, 1992, vol. 22, issue 1, 105-114

Abstract: This study examines the impact of sales tax differentials on taxable sales in rural south Georgia during 1980-89, using a cell-mean corrected regression model. Results indicate that sales tax rate differentials have a significant effect on urban counties' taxable sales. The level of impact on taxable sales, as measured by its elasticity coefficient, is influenced by the shopping characteristics of the area. A greater number of service and retail establishments tends to lessen the impact of a tax differential as search costs are reduced; nearby shopping alternatives increase the effect as travel costs are reduced. The impact of creating a sales tax differential appears to depend on the shopping attributes of the region relative to its competing areas. In a rural environment where shopping patterns are established and consumers lack convenient shopping alternatives, regional shopping centers have the potential to shift or export part of their tax burden without causing significant loss to their retail trading base.

Date: 1992
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