ISSN:
1573-6970
Keywords:
indirect tax harmonization
;
origin principle
Source:
Springer Online Journal Archives 1860-2000
Topics:
Economics
Notes:
Abstract This paper establishes a parallelism between indirect tax harmonization when taxes are levied according to the destination principle and its counterpart when taxes are imposed on an origin basis. Using a simple two-country model of international trade it is argued that, under “normal” circumstances, indirect tax harmonization under the origin principle, considered as a movement of domestic taxes toward an appropriately designed average tax structure, is potentially Pareto improving. It is also shown that if the initial position is a Nash equilibrium, there are “exceptional” situations under which the above-mentioned reform may generate an actual Pareto improvement, so that both countries improve their welfare without any need for a compensating international transfer.
Type of Medium:
Electronic Resource
URL:
http://dx.doi.org/10.1007/BF00400149
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