Abstract
AbstractThis article examines the introduction of a fringe benefits tax (FBT) as part of a revenue‐neutral package with personal income tax cuts. With an effective tax‐wage bargain in force, such an FBT package will not increase labour costs overall. It will, however, increase the labour costs of employers who, prior to the tax reform, were paying above average shares of their employees' remuneration in non‐cash benefits. Employers whose pre‐reform labour costs contained relatively low shares of non‐cash payments will experience falls in labour costs.
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