Optimal gasoline tax in developing, oil-producing countries: The case of Mexico
AbstractThis paper uses the methodology of Parry and Small (2005) to estimate the optimal gasoline tax for a less-developed oil-producing country. The relevance of the estimation relies on the differences between less-developed countries (LDCs) and industrial countries. We argue that lawless roads, general subsidies on gasoline, poor mass transportation systems, older vehicle fleets and unregulated city growth make the tax rates in LDCs differ substantially from the rates in the developed world. We find that the optimal gasoline tax is $1.90 per gallon at 2011 prices and show that the estimate differences are in line with the factors hypothesized. In contrast to the existing literature on industrial countries, we show that the relative gasoline tax incidence may be progressive in Mexico and, more generally, in LDCs.
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Bibliographic InfoArticle provided by Elsevier in its journal Energy Policy.
Volume (Year): 67 (2014)
Issue (Month): C ()
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Web page: http://www.elsevier.com/locate/enpol
Gasoline tax; Gasoline subsidy; Tax incidence;
Other versions of this item:
- Fausto Hernández-Trillo & Arturo Antón-Sarabia, 2013. "Optimal Gasoline Tax in Developing, Oil-Producing Countries: The Case of Mexico," Working papers DTE 555, CIDE, División de Economía.
- Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
- Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
- H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
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