The Effect of Cross-Border Shopping on Commodity Tax Revenue: Results from a Natural Experiment

86 Pages Posted: 22 Jun 2022

See all articles by Richard Friberg

Richard Friberg

Stockholm School of Economics - Department of Economics

Emil Mathias Strøm Halseth

Norwegian School of Economics (NHH)

Frode Steen

Norwegian School of Economics (NHH) - Department of Economics

Simen A. Ulsaker

Norwegian School of Economics (NHH)

Date Written: June 20, 2022

Abstract

We use grocery data from Norway and COVID-19 border closings to gauge the effect of cross-border shopping on commodity tax revenue. Detailed store-category level data identify differential treatment effects that depend on distance to Swedish stores. Economically significant effects extend to up to two hours’ drive from the border, and even further for prominent cross-border shopping products as beer, cigarettes and soda. Across all products, cross-border shopping decreases tax revenue from VAT by 3.6% at the national level. National commodity tax revenue from carbonated soft drinks (subject to a sugar tax) is reduced by 8.1% and from cigarettes by 11.9%.

Keywords: Cross-border shopping, Commodity taxes, Excise taxes, Tax Competition

JEL Classification: F15, H20, L81

Suggested Citation

Friberg, Richard and Halseth, Emil Mathias Strøm and Steen, Frode and Ulsaker, Simen A., The Effect of Cross-Border Shopping on Commodity Tax Revenue: Results from a Natural Experiment (June 20, 2022). NHH Dept. of Economics Discussion Paper No. 09, 2022, Available at SSRN: https://ssrn.com/abstract=4142274 or http://dx.doi.org/10.2139/ssrn.4142274

Richard Friberg (Contact Author)

Stockholm School of Economics - Department of Economics ( email )

P.O. Box 6501
Sveavagen 65
S-113 83 Stockholm
Sweden
+46 8 736 9645 (Phone)
+46 8 720 7752 (Fax)

Emil Mathias Strøm Halseth

Norwegian School of Economics (NHH) ( email )

Helleveien 30
Bergen, NO-5045
Norway

Frode Steen

Norwegian School of Economics (NHH) - Department of Economics ( email )

Helleveien 30
N-5035 Bergen
Norway
+47 55 959 259 (Phone)
+47 55 959 543 (Fax)

Simen A. Ulsaker

Norwegian School of Economics (NHH) ( email )

Helleveien 30
Bergen, NO-5045
Norway

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