This study investigates the effects on sales tax regressivity and revenue productivity when various combinations of consumer services are added to the base. Idaho's commodities-oriented tax structure (which is similar to that of most other states) is the basis of this investigation. Unlike the conventional methods, progressivity-regressivity indices are developed to evaluate the equity effects, and this approach is argued to be superior. Two ability-to-pay measures are adopted for this purpose. Further, the study evaluates the revenue significance of including services in the base. From the standpoints of equity and revenue, the results strongly favor inclusion of service in the sales tax base.
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