Changes in the tax mix from income taxation to GST: Revenue and redistribution

John Creedy and Angela Mellish

New Zealand Economic Papers, 2011, vol. 45, issue 3, 299-309

Abstract: This paper examines the conditions under which a partial shift from a multi-step personal income tax structure towards a general consumption tax can be both revenue-neutral and distribution-neutral, in a cross-sectional context. In the absence of a tax-free-threshold, this can be achieved with a broad-based consumption tax, or one in which, at each income level, the proportion of taxed expenditure is independent of total expenditure. Such a change, involving a smaller percentage reduction in the higher marginal tax rates, is also shown to increase labour supply in a simple continuous-hours model.

Date: 2011
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Working Paper: Changes in the Tax Mix from Income Taxation to GST: Revenue and Redistribution (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:taf:nzecpp:v:45:y:2011:i:3:p:299-309

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DOI: 10.1080/00779954.2011.591286

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