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2011-01-10

State taxation and competitiveness

Comments on Christian Kerr “High tax hurts the laggard states”, 10/01/2011, http://www.theaustralian.com.au/news/high-tax-hurts-the-laggard-states/story-e6frg6n6-1225984687845

A few questions:

1. Are the GSP growth rates listed in the table at the beginning real or nominal? They appear to be nominal. If nominal, then do changes in prices especially mining products affect the real growth rates?

2. Do different industrial structures have different implications on tax regimes or taxation revenue as a proportion of the GSP?

3. What about per capita growth by states? Do they have the same or a different pattern?

4. What about real per capita growth by states? Do they have the same or different implications for the relationship between the taxation regimes and growth identified by the author?

It seems the study may have possibly created biases due to use of an incorrect comparison methodology.

If that is so, then a more sound study is needed to derive reliable conclusions.

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