The Optimal Mix of Inflationary Finance and Commodity Taxation with Collection Lags
September 1, 1990
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Summary
When there are collection lags in the tax system, inflation reduces the real revenues. This is often offered as an argument for less reliance on the inflation tax. But the optimal rates of other taxes should also be reconsidered in the light of collection lags. When this is done, the focus shifts from the revenues (which can be recouped by changing the rates of these taxes), to the associated costs of collection. In a benchmark case where the average costs of collection are constant, the optimal inflation tax is independent of the collection lag.
Subject: Consumption, Consumption taxes, Inflation, Revenue administration, Tax collection
Keywords: average cost, inflation tax, WP
Pages:
16
Volume:
1990
DOI:
Issue:
087
Series:
Working Paper No. 1990/087
Stock No:
WPIEA0871990
ISBN:
9781451953169
ISSN:
1018-5941
Notes
Also published in Staff Papers, Vol. 38, No. 3, September 1991.
