IDEAS home Printed from https://ideas.repec.org/p/cop/wpaper/g-343.html
   My bibliography  Save this paper

The Economic Effects of an International Student Levy Under Alternative Price Elasticity Assumptions

Author

Listed:
  • Xianglong Locky Liu
  • James Giesecke
  • Jason Nassios

Abstract

We investigate the economic consequences and tax efficiency of a 5% international student levy (ISL). Like any tax, ceteris paribus, an ISL will reduce certain economic activities. At the industry level, the negative effects on activity will be largest for sectors involved in the export of education services. At the regional level, the negative economic consequences will be largest for regions that have relatively large export education sectors. Due to limited empirical evidence on the price elasticity of demand for export education, we test the sensitivity of our results under a range of elasticity estimates. For sufficiently inelastic demand for export education, an ISL improves the terms of trade and increases real consumption. By evaluating and comparing the marginal excess burden of an ISL with other hypothetical service export taxes, we demonstrate that these results stem from imposing an export tax at a low rate on a commodity that is generally tax-exempt and carries a low foreign export demand elasticity, rather than being a unique feature of the ISL. If the policy objective is to assist the education sector, our results draw into question the suitability of the ISL.

Suggested Citation

  • Xianglong Locky Liu & James Giesecke & Jason Nassios, 2023. "The Economic Effects of an International Student Levy Under Alternative Price Elasticity Assumptions," Centre of Policy Studies/IMPACT Centre Working Papers g-343, Victoria University, Centre of Policy Studies/IMPACT Centre.
    • Handle: RePEc:cop:wpaper:g-343
    as

    Download full text from publisher

    File URL: https://www.copsmodels.com/ftp/workpapr/g-343.pdf
    File Function: Initial version, 2023-12
    Download Restriction: no
    File URL: https://www.copsmodels.com/elecpapr/g-343.htm
    File Function: Local abstract: may link to additional material.
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. James A. Giesecke & Christopher King & Jason Nassios & Nhi Hoang Tran, 2021. "The impact of GST reform on Australia’s state and territory economies," Applied Economics, Taylor & Francis Journals, vol. 53(51), pages 5929-5947, November.
    2. Philip Adams & Janine Dixon & Mark Horridge, 2015. "The Victoria University Regional Model (VURM): Technical Documentation, Version 1.0," Centre of Policy Studies/IMPACT Centre Working Papers g-254, Victoria University, Centre of Policy Studies/IMPACT Centre.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Liu, Xianglong Locky & Nassios, Jason & Giesecke, James, 2024. "To tax or to spend? Modelling tax policy responses to oil price shocks," Energy Policy, Elsevier, vol. 185(C).
    2. Jason Nassios & James Giesecke, 2022. "Inefficient at Any Level: A Comparative Efficiency Argument for Complete Elimination of Property Transfer Duties and Insurance Taxes," Centre of Policy Studies/IMPACT Centre Working Papers g-337, Victoria University, Centre of Policy Studies/IMPACT Centre.
    3. Robson, Edward N. & Wijayaratna, Kasun P. & Dixit, Vinayak V., 2018. "A review of computable general equilibrium models for transport and their applications in appraisal," Transportation Research Part A: Policy and Practice, Elsevier, vol. 116(C), pages 31-53.
    4. Philip Adams, 2021. "Zero Greenhouse Gas Emissions by 2050: What it means for the Australian Economy, Industries and Regions," Centre of Policy Studies/IMPACT Centre Working Papers g-324, Victoria University, Centre of Policy Studies/IMPACT Centre.
    5. Nassios, J. & Giesecke, J.A. & Dixon, P.B. & Rimmer, M.T., 2019. "Modelling the allocative efficiency of landowner taxation," Economic Modelling, Elsevier, vol. 81(C), pages 111-123.
    6. Wang, Jiayu & Quiggin, John & Wittwer, Glyn, 2019. "The rebound effect of the Australian proposed light vehicle fuel efficiency standards," Economic Analysis and Policy, Elsevier, vol. 61(C), pages 73-84.
    7. Janine M. Dixon & Philip D. Adams & Nicholas Sheard, 2021. "The impacts of COVID‐19 containment on the Australian economy and its agricultural and mining industries," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 65(4), pages 776-801, October.
    8. Jason Nassios & John Madden & James Giesecke & Janine Dixon & Nhi Tran & Peter Dixon & Maureen Rimmer & Philip Adams & John Freebairn, 2019. "The economic impact and efficiency of state and federal taxes in Australia," Centre of Policy Studies/IMPACT Centre Working Papers g-289, Victoria University, Centre of Policy Studies/IMPACT Centre.
    9. Janine Dixon, 2016. "Workforce Adaptation to the Cessation of Motor Vehicle Manufacturing in Australia," Economic Papers, The Economic Society of Australia, vol. 35(4), pages 301-315, December.
    10. J.M. Dixon & J. Nassios, 2018. "The Effectiveness of Investment Stimulus Policies in Australia," Centre of Policy Studies/IMPACT Centre Working Papers g-282, Victoria University, Centre of Policy Studies/IMPACT Centre.
    11. Xianglong Liu & Jason Nassios & James Giesecke, 2022. "Oil Supply Shocks and Tax Policy Responses in Australia: Insights from a Dynamic CGE Framework," Centre of Policy Studies/IMPACT Centre Working Papers g-336, Victoria University, Centre of Policy Studies/IMPACT Centre.
    12. Janine M. Dixon & Jason Nassios, 2018. "A Dynamic Economy-wide Analysis of Company Tax Cuts in Australia," Centre of Policy Studies/IMPACT Centre Working Papers g-287, Victoria University, Centre of Policy Studies/IMPACT Centre.
    13. Ghaith, Ziad & Kulshreshtha, Suren & Natcher, David & Cameron, Bobby Thomas, 2021. "Regional Computable General Equilibrium models: A review," Journal of Policy Modeling, Elsevier, vol. 43(3), pages 710-724.
    14. Jason Nassios & James Giesecke, 2022. "Property Tax Reform: Implications for Housing Prices and Economic Productivity," Centre of Policy Studies/IMPACT Centre Working Papers g-330, Victoria University, Centre of Policy Studies/IMPACT Centre.
    15. Xianglong Locky Liu & James Giesecke & Jason Nassios, 2023. "The Economic Effects of an International Student Levy," Centre of Policy Studies/IMPACT Centre Working Papers g-341, Victoria University, Centre of Policy Studies/IMPACT Centre.
    16. James A. Giesecke & Nhi H. Tran, 2018. "The National and Regional Consequences of Australia's Goods and Services Tax," The Economic Record, The Economic Society of Australia, vol. 94(306), pages 255-275, September.
    17. Hodges, Cedric, 2020. "The future of Australia’s thermal coal industry in a low carbon environment," Conference papers 333232, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    18. Jason Nassios & James Giesecke & Xianglong Locky Liu, 2024. "An impossible triangle? The impact of housing policy on affordability, accessibility, and efficiency," Centre of Policy Studies/IMPACT Centre Working Papers g-344, Victoria University, Centre of Policy Studies/IMPACT Centre.

    More about this item

    Keywords

    Taxation; International Student; CGE modelling; Excess Burden;
    All these keywords.

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cop:wpaper:g-343. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Mark Horridge (email available below). General contact details of provider: https://edirc.repec.org/data/cpmonau.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.