Tax principles and tax harmonization under imperfect competition: A cautionary example
Keen, M., Lahiri, S., & Raimondos-Moller, Pascalis (2002) Tax principles and tax harmonization under imperfect competition: A cautionary example. European Economic Review, 46(8), pp. 1559-1568.
This paper shows that under imperfect competition, the welfare effects of indirect tax harmonization may depend crucially on whether taxes are levied by the destination or the origin principle. In a standard model of imperfect competition, while harmonization always makes at least one country better off, and may be Pareto-improving, when taxes are levied under the destination principle (which currently applies in the European Union), harmonization of origin-based taxes (as recently proposed by the European Commission) is certain to be Pareto-worsening when the preferences in the two countries are identical, and is likely to be so even when they differ.
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|Item Type:||Journal Article|
|Deposited On:||22 Mar 2016 03:26|
|Last Modified:||22 Mar 2016 04:13|
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