Spatial Impact of Transportation Infrastructure: A Spatial Econometric CGE Approach - Regional Science Matters - page 166

10.4.3 Government

The government block includes functions representing government taxes and
government income and expenditure. Five types of taxes are included in the
model: tariff, export tax, sales tax, indirect tax and income tax from
non-government institutions. The functions of different taxes revenue are denoted
respectively as below:

X c
k

MTAX ¼

1 tm k

pwm k ER QM k ð 10 7 Þ

:

¼

X c
k ¼ 1 te k

ETAX ¼ PWE k ER QE k ð 10 8 Þ

:

X c
k ¼ 1 ts k

STAX ¼ PQS k ð QINTD k þ QCD k þ QGD k þ QINVD k Þ ð 10 9 Þ

:

X a
k

ITAX ¼

1 tx k

PX k QX k ð 10 10 Þ

:

¼

DTAX ¼ tyh YH ð 10 : 11 Þ

Where
MTAX: Tariff revenue;
ETAX: Export tax revenue;
STAX: Sales tax revenue;
ITAX: Indirect tax revenue;
DTAX: Income tax revenue from non-government institutions;
tm c : Tariff rates on commodity c;
te c : Export tax rate by commodity c;
pwm c : World price of imports in dollars on commodity c;
PWE c : World price of exports in dollars;
QM c : Imports of commodity c;
QE c : Domestic output exported by commodity c;
ts c : Sales tax rates;
PQS c : Supply price of composite commodity c;
QGD c : Government consumption demand by commodity c;
The functions of government income, consumption and expenditure are denoted as:

YG ¼ MTAX þ ETAX þ STAX þ ITAX þ DTAX þ ð govwor E Þ ð 10 12 Þ

:

QGD c ¼ QGDADJ qgdconst c ð 10 13 Þ

:

X c
k

EG ¼

1 QGD k

PQD k ð 10 14 Þ

:

¼

where
YG, QGD and EG denote government income, government commodity
consumption and government expenditure respectively;