Unrealistic Profits, Unreliable Results : Rethinking Stockpiling Behavior in Consumption Tax Models

Consumption taxes, levied on the final purchase of goods and services, are a prevalent means for governments to raise revenue. To assess the potential impact of these taxes, economists rely on consumption tax models that simulate consumer behavior and predict revenue generation. However, a key limitation of these models lies in their depiction of stockpiling behavior. Stockpiling refers to the act of consumers purchasing goods in advance of a perceived future price increase, often triggered by an anticipated rise in consumption taxes. While acknowledging stockpiling, existing models often rely on simplifying assumptions, leading to potentially unrealistic and misleading results. This paper argues that current consumption tax models often overestimate the extent of stockpiling, resulting in inflated predictions of profit

Author: Sanam

Publisher: Tredition Gmbh

Publication Date: Jun 28, 2024

Number of Pages: NA pages

Language: English

Binding: Paperback

ISBN-10: 3384274350

ISBN-13: 9783384274359