Abstract
AbstractWe 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, such as beer, cigarettes, and carbonated soft drinks. Across all products, cross‐border shopping decreases tax revenue from VAT by 3.6 percent at the national level. National commodity tax revenue from carbonated soft drinks (subject to a sugar tax) is reduced by 8.1 percent and from cigarettes by 11.9 percent.
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