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Economic Impact Of A Provincial Fuel Levy: A Cge Analysis

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  • Scott Mcdonald
  • Sanri Reynolds
  • Melt Van Schoor

Abstract

Provincial governments in South Africa, commencing with the Western Cape, are expected to institute provincial fuel levies in addition to the existing national fuel levy in future. This paper presents results from a Computable General Equilibrium (CGE) model calibrated with a detailed Social Accounting Matrix (SAM) to evaluate the effects of a 3 per cent provincial fuel levy implemented simultaneously in all provinces. The results are presented for the petroleum products market, government, the macro economy, industries, factor income (including employment) and household income and expenditure. Results indicate that although the impact of the fuel levy is not drastic, it is large relative to the expected revenue gain. The impact is distributed more uniformly than was expected.

Suggested Citation

  • Scott Mcdonald & Sanri Reynolds & Melt Van Schoor, 2006. "Economic Impact Of A Provincial Fuel Levy: A Cge Analysis," South African Journal of Economics, Economic Society of South Africa, vol. 74(3), pages 422-441, September.
    • Handle: RePEc:bla:sajeco:v:74:y:2006:i:3:p:422-441
    DOI: 10.1111/j.1813-6982.2006.00078.x
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    2. Berck, Peter & Robinson, Sherman & Goldman, George E, 1990. "The use of computable general equilibrium models to assess water policies," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt082465zv, Department of Agricultural & Resource Economics, UC Berkeley.
    3. Kilkenny, Maureen, 1991. "Computable General Equilibrium Modeling of Agricultural Policies: Documentation of the 30-Sector FPGE GAMS Model of the United States," Staff Reports 278539, United States Department of Agriculture, Economic Research Service.
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