The Short Run and Long Run Welfare Effects of Implementing a Practical System of Consumption Taxation

  • Robin Boadway
Conference paper


Tax reform seems to be a perpetual item on the policy agenda of governments around the world, reflecting the fact that we still do not seem to have it “right”. There are many reasons for this. One is simply that judgments about what is the right tax system vary immensely across observers, even well-informed ones. This is inevitable given the value judgments involved. Another is that the reform process is itself potentially painful. Although tax reform may improve the efficiency of the economy and lead to some net gains, it is almost always the case that it also involves a reallocation of the tax burden among taxpayers with some gaining and others losing. Moreover, it also often involves transitional or short run windfall gains and losses. Governments apparently place great weight on these transitional effects. One of the main purposes of this paper is to investigate the interaction of these transitional gains and losses with longer run effects from a dynamic welfare economics point of view.


Golden Rule Consumer Durable Capita Utility Windfall Gain Weakly Pareto Optimal 
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© Springer-Verlag Berlin · Heidelberg 1990

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  • Robin Boadway

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