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

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  • John Creedy
  • Angela Mellish

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.

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  • John Creedy & Angela Mellish, 2011. "Changes in the tax mix from income taxation to GST: Revenue and redistribution," New Zealand Economic Papers, Taylor & Francis Journals, vol. 45(3), pages 299-309, May.
    • Handle: RePEc:taf:nzecpp:v:45:y:2011:i:3:p:299-309
    DOI: 10.1080/00779954.2011.591286
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    References listed on IDEAS

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    1. John Creedy & Norman Gemmell, 2006. "Modelling Tax Revenue Growth," Books, Edward Elgar Publishing, number 4073.
    2. John Creedy, 1998. "The Dynamics of Inequality and Poverty," Books, Edward Elgar Publishing, number 1484.
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    Cited by:

    1. John Creedy & Jesse Eedrah, 2014. "The Role of Value Judgements in Measuring Inequality," Treasury Working Paper Series 14/13, New Zealand Treasury.
    2. John Creedy & Penny Mok, 2017. "Labour supply in New Zealand and the 2010 tax and transfer changes," New Zealand Economic Papers, Taylor & Francis Journals, vol. 51(1), pages 60-78, January.
    3. John Creedy & Jesse Eedrah, 2016. "Income redistribution and changes in inequality in New Zealand from 2007 to 2011: Alternative distributions and value judgements," New Zealand Economic Papers, Taylor & Francis Journals, vol. 50(2), pages 129-152, August.
    4. John Creedy & Jesse Eedrah, 2016. "Income redistribution and changes in inequality in New Zealand from 2007 to 2011: Alternative distributions and value judgements," New Zealand Economic Papers, Taylor & Francis Journals, vol. 50(2), pages 129-152, August.
    5. John Creedy & Penny Mok, 2017. "Labour supply in New Zealand and the 2010 tax and transfer changes," New Zealand Economic Papers, Taylor & Francis Journals, vol. 51(1), pages 60-78, January.

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