**7. Conclusion**

On the basis of an imperative tradeoff between equality and efficiency assumption, optimal taxation literature which claims that egalitarian redistribution policies of the state will create negative results oppose redistribution policies of the state because of equality-efficiency dilemma. The main starting point on this topic is not being able to enable a certain budget revenue goal via lump-sum taxes because of the asymmetrical information between state and individual and the need for distortionary taxes. In this context, one of the propositions for resolution in the literature is optimal commodity tax application.

In optimal tax application with the aim of efficiency, discussion of single rate or differential tax application is in question.

Ramsey's study on optimal commodity taxes, which suggest goods to be taxed inversely proportional with price elasticity of demand, is one of the primary studies in the literature. While Ramsey rule basically proposes goods with low price elasticity of demand to be taxed at higher rates, its purpose is to preserve individuals' decisions about the consumption of goods with increasing prices unchanged as part of low elasticity, or in other words, a deadweight loss or wealth loss not to be formed in the economy. This rule, in which economic efficiency concern dominates, faces the biggest criticism because of the unjust distribution emerging as a result of the assumption that all individuals resemble each other.

With the inverse elasticity rule, Ramsey suggests necessity goods, which occupy a large share in the consumption basket of lower income groups, to be taxed at higher rates and goods, which appeal to higher income groups, to be taxed at lower rates due to demand elasticity. What is important in this context is whether price elasticity of demand for goods change or not as part of macrovariables and microvariables.

Price elasticity of demand for luxury and necessity goods rises depending on short and long term effect, commercial liberalization, and increased competition and innovation, which are all macroeconomic variables. On the other hand, since brand loyalty, which is the leading microeconomic variable, is high especially for luxury goods, it affects price elasticity of demand for the aforementioned goods.

Additionally, luxury goods to be taxed at higher rates under the assumption that they are leisure complementaries may affect the decisions of individuals on behalf of working. In this context, the criticisms brought about by Ramsey's rule in terms of economic efficiency at the differential taxation, it can be seen that the rule of inverse elasticity on equality can be reconsidered.
