IDEAS home Printed from https://ideas.repec.org/p/nzt/nztwps/16-01.html
   My bibliography  Save this paper

The Optimal Threshold for GST on Imported Goods

Author

Listed:

Abstract

This paper examines the determination of the optimal threshold value for Goods and Services Tax (GST) for imported units arising from internet orders. The concept of an optimal threshold is wider than simply the maximisation of revenue net of administrative costs. At the optimal threshold, the marginal cost of funds from GST is equated to the ratio of the marginal value of public funds to their marginal social value, reflecting the value judgements of a decision maker. The marginal cost of funds allows both for compliance costs and the marginal excess burden arising from a small increase in the threshold. Illustrative numerical values are reported, showing the sensitivity to administrative costs, the demand elasticity and, importantly, value judgements.

Suggested Citation

  • John Creedy, 2016. "The Optimal Threshold for GST on Imported Goods," Treasury Working Paper Series 16/01, New Zealand Treasury.
    • Handle: RePEc:nzt:nztwps:16/01
    as

    Download full text from publisher

    File URL: https://treasury.govt.nz/sites/default/files/2016-03/twp16-01.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. (IFS), Institute for Fiscal Studies & Mirrlees, James (ed.), 2011. "Tax By Design: The Mirrlees Review," OUP Catalogue, Oxford University Press, number 9780199553747.
    2. John Creedy & Nicolas Hérault & Guyonne Kalb, 2011. "Measuring welfare changes in behavioural microsimulation modelling: Accounting for the random utility component," Journal of Applied Economics, Universidad del CEMA, vol. 14, pages 5-34, May.
    3. John Creedy, 1998. "Measuring Welfare Changes and Tax Burdens," Books, Edward Elgar Publishing, number 1579.
    4. Emmanuel Saez, 2001. "Using Elasticities to Derive Optimal Income Tax Rates," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 68(1), pages 205-229.
    5. Keen, Michael & Mintz, Jack, 2004. "The optimal threshold for a value-added tax," Journal of Public Economics, Elsevier, vol. 88(3-4), pages 559-576, March.
    6. John Creedy, 2015. "The elasticity of taxable income, welfare changes and optimal tax rates," New Zealand Economic Papers, Taylor & Francis Journals, vol. 49(3), pages 227-248, August.
    7. John Creedy & Cath Sleeman, 2005. "Excise taxation in New Zealand," New Zealand Economic Papers, Taylor & Francis Journals, vol. 39(1), pages 1-35.
    8. Bev Dahlby, 2008. "The Marginal Cost of Public Funds: Theory and Applications," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262042509, December.
    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. Creedy, John & Gemmell, Norman & Hérault, Nicolas & Mok, Penny, 2018. "Microsimulation Analysis of Optimal Income Tax Reforms. An Application to New Zealand," Working Paper Series 20834, Victoria University of Wellington, Chair in Public Finance.
    2. Alinaghi, Nazila & Creedy, John & Gemmell, Norman, 2020. "Designing Direct Tax Reforms: Alternative Approaches," Working Paper Series 9338, Victoria University of Wellington, Chair in Public Finance.
    3. Creedy, John & Gemmell, Norman & Hérault, Nicolas & Mok, Penny, 2018. "Microsimulation Analysis of Optimal Income Tax Reforms. An Application to New Zealand," GLO Discussion Paper Series 213, Global Labor Organization (GLO).
    4. Shun-ichiro Bessho & Masayoshi Hayashi, 2015. "Should the Japanese tax system be more progressive? An evaluation using the simulated SMCFs based on the discrete choice model of labor supply," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 22(1), pages 144-175, February.
    5. Nathaniel Hendren, 2016. "The Policy Elasticity," Tax Policy and the Economy, University of Chicago Press, vol. 30(1), pages 51-89.
    6. Nazila Alinaghi & John Creedy & Norman Gemmell, 2021. "Designing Personal Income Tax and Transfer Reforms: Alternative Modelling Approaches," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 54(4), pages 445-461, December.
    7. Alinaghi, Nazila & Creedy, John & Gemmell, Norman, 2020. "Designing Direct Tax Reforms: Alternative Approaches," Working Paper Series 21093, Victoria University of Wellington, Chair in Public Finance.
    8. John Creedy & Penny Mok, 2018. "The marginal welfare cost of personal income taxation in New Zealand," New Zealand Economic Papers, Taylor & Francis Journals, vol. 52(3), pages 323-338, September.
    9. Sanz Labrador, Ismael & Sanz-Sanz, José Félix, 2013. "Política fiscal y crecimiento económico: consideraciones microeconómicas y relaciones macroeconómicas," Macroeconomía del Desarrollo 5367, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    10. Andrienko, Yuri & Apps, Patricia & Rees, Ray, 2014. "Optimal Taxation, Inequality and Top Incomes," IZA Discussion Papers 8275, Institute of Labor Economics (IZA).
    11. Auriol, Emmanuelle & Warlters, Michael, 2012. "The marginal cost of public funds and tax reform in Africa," Journal of Development Economics, Elsevier, vol. 97(1), pages 58-72.
    12. John Creedy, 2015. "The elasticity of taxable income, welfare changes and optimal tax rates," New Zealand Economic Papers, Taylor & Francis Journals, vol. 49(3), pages 227-248, August.
    13. Stefanie Stantcheva, 2017. "Optimal Taxation and Human Capital Policies over the Life Cycle," Journal of Political Economy, University of Chicago Press, vol. 125(6), pages 1931-1990.
    14. Blomquist, Sören & Simula, Laurent, 2019. "Marginal deadweight loss when the income tax is nonlinear," Journal of Econometrics, Elsevier, vol. 211(1), pages 47-60.
    15. Yuri Andrienko & Patricia Apps & Ray Rees, 2016. "Optimal taxation and top incomes," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 23(6), pages 981-1003, December.
    16. John Creedy & Norman Gemmell, 2020. "The elasticity of taxable income of individuals in couples," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 27(4), pages 931-950, August.
    17. Michael Carlos Best & Henrik Jacobsen Jacobsen, 2013. "Optimal Income Taxation with Career Effects of Work Effort," Working Papers 2013-9, Princeton University. Economics Department..
    18. Harju Jarkko, 2014. "Policy evaluation methods in tax research – new evidence and interpretations," Nordic Tax Journal, Sciendo, vol. 2014(1), pages 76-92, May.
    19. Patricia Apps & Ngo Long & Ray Rees, 2014. "Optimal Piecewise Linear Income Taxation," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 16(4), pages 523-545, August.
    20. Thomas Piketty & Emmanuel Saez, 2012. "Optimal Labor Income Taxation," NBER Working Papers 18521, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    Goods and Services Tax; Marginal cost of Funds; de minimis;
    All these keywords.

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation

    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:nzt:nztwps:16/01. 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: CSS I&T Web & Publishing, The Treasury (email available below). General contact details of provider: https://edirc.repec.org/data/tregvnz.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.