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GTAP Resource #5795

"The economic impact and efficiency of state and federal taxes in Australia"
by Nassios, Jason, John Madden, James Giesecke, Janine Dixon, Nhi Tran, Peter Dixon, Maureen Rimmer, Philip Adams and John Freebairn

Australia’s most comprehensive review of state and federal tax policy, the Henry Review of Australia’s Future Tax System (2009), made several recommendations to promote resilience, fairness, and prosperity via tax reform. Some of the key reforms suggested by Henry et al. (2009) include a reduction in Australia’s federally-imposed corporate tax rate from 30 to 25 per cent, and the removal of property transfer duties levied by state governments, in favour of a broad-based land tax. The review by Henry et al (2009) utilises a long-run, comparative static computable general equilibrium (CGE) model of the Australian economy to study the tax system. Implicit within this framework is a single layer of government.
In this paper, we present an analysis of Australia’s state and federal tax system using a bottom-up multi-regional CGE model of Australia’s states and territories, called VURMTAX. Our paper quantifies: (i) the relative economic efficiency of unilateral state tax policy reforms in a single Australian state-of-interest; (ii) the excess burden of Australia’s three main federally-imposed taxes; and (iii) the broader macroeconomic, state and industry impacts of federal tax policy, and unilateral state tax policy, reforms. Our assessment of the relative efficiency of NSW state and Australian federal taxes yields a set of marginal and average excess burdens, which are summarised and discussed. In total, we study nineteen major Australian taxes, of which sixteen are levied at the state/local government level. We compare our results in order to assess the relative efficiency of Australian taxes, and compare our work to past studies. This serves to elucidate some key differences in parameter assumptions and modelling methodology that drive our results.

Resource Details (Export Citation) GTAP Keywords
Category: 2019 Conference Paper
Status: Published
By/In: Presented at the 22nd Annual Conference on Global Economic Analysis, Warsaw, Poland
Date: 2019
Created: Nassios, J. (4/15/2019)
Updated: Nassios, J. (4/18/2019)
Visits: 1,225
- Dynamic modeling
- Oceania

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