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Welfare, Revenue and Indirect Tax Harmonization under the Origin Principle

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  • Miguel Angel López-García

    (Universidad Autónoma de Barcelona)

Abstract

This paper discusses whether some propositions concerning the effects of indirect tax harmonization that have been derived when taxes are levied on a destination basis and revenue is returned to the individuals as a lump-sum transfer can, when accurately reformulated, be extended to a framework where commodities are taxed according to the origin principle and the governments use their revenue to finance the purchase of goods and services. Using a two-country model, it is argued that a non-uniform proportional convergence of domestic taxes towards a properly designed «average » tax structure can be characterized as potentially Pareto-improving. However, these reforms will not, in general, lead to a strict Pareto-improvement where every country is better off without any need for international transfers.

Suggested Citation

  • Miguel Angel López-García, 2004. "Welfare, Revenue and Indirect Tax Harmonization under the Origin Principle," Hacienda Pública Española / Review of Public Economics, IEF, vol. 168(1), pages 9-25, marzo.
    • Handle: RePEc:hpe:journl:y:2004:v:168:i:1:p:9-25
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    : indirect tax harmonization; origin principle; reform of commodity taxes.;
    All these keywords.

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • H87 - Public Economics - - Miscellaneous Issues - - - International Fiscal Issues; International Public Goods

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