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Decomposing the Marginal Excess Burden of Australia’s Goods and Services Tax

George Verikios (), Jodie Patron and Reza Gharibnavaz

MPRA Paper from University Library of Munich, Germany

Abstract: We estimate the marginal excess burden of the GST and its components. Our results show that the GST is highly distortionary in its treatment of intermediate inputs and investment, but is efficient as applied to household consumption. We also estimate the general equilibrium effects of changes to the GST base and rate, and its removal from investment. The general equilibrium estimates support the marginal excess burden estimates. Our results suggest that the efficiency of the GST could be improved by broadening the consumption base or removing it from investment. Simply increasing the GST rate would be welfare decreasing.

Keywords: computable general equilibrium; differential incidence; goods and services tax; marginal excess burden; tax reform; value-added tax. (search for similar items in EconPapers)
JEL-codes: C68 D58 D61 H21 H22 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-pbe and nep-pub
Date: 2017-03-01
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