The Built-Flexibility of Consumption Taxes

John Creedy and Norman Gemmell

No 704, Department of Economics - Working Papers Series from The University of Melbourne

Abstract: The purpose of this paper is to extend the analysis of built-in flexibility to various forms of consumption taxation. This is useful in view of the extensive use of indirect taxes. Section 2 begins with basic definitions and a discussion of income taxation, concentrating on the multi-step case. This is needed in view of the fact that consumption is from income net of income taxation. Section 3 extends the analysis to include ad valorem and unit consumption taxes. Section 4 examines the implications for the revenue ealsticity of changes in indirect tax rates. Some illustrative calculations are reported in section 5. Section 6 briefly concludes.

Keywords: TAXATION; INCOME; INCOME REDISTRIBUTION (search for similar items in EconPapers)
JEL-codes: D30 H20 (search for similar items in EconPapers)
Pages: 24 pages
Date: 1999
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Persistent link: https://EconPapers.repec.org/RePEc:mlb:wpaper:704

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