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The Effects on New Zealand Households of an Increase in The Petrol Excise Tax

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Abstract

This paper reports estimates of the potential welfare effects of hypothetical increases in the petrol excise tax in New Zealand. Equivalent variations, for a range of household types and total expenditure levels, are obtained along with distributional measures. Household demand responses are modelled using the Linear Expenditure System, where parameters vary by total expenditure level and household type. The effects on inequality were founds to be negligible, but the marginal excess burdens typically ranged between 35 and 55 cents per dollar of additional revenue.

Suggested Citation

  • John Creedy, 2004. "The Effects on New Zealand Households of an Increase in The Petrol Excise Tax," Treasury Working Paper Series 04/01, New Zealand Treasury.
    • Handle: RePEc:nzt:nztwps:04/01
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    File URL: https://treasury.govt.nz/sites/default/files/2007-10/twp04-01.pdf
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    References listed on IDEAS

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    2. R. G. D. Allen, 1975. "Index Numbers in Theory and Practice," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-349-02312-7.
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    4. Roberts, Kevin, 1980. "Price-Independent Welfare Prescriptions," Empirical Economics, Springer, vol. 13(3), pages 277-297, June.
    5. John Creedy, 2004. "The Excess Burden of Taxation," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 37(4), pages 454-464, December.
    6. John Creedy, 1998. "Measuring the Welfare Effects of Price Changes: A Convenient Parametric Approach," Australian Economic Papers, Wiley Blackwell, vol. 37(2), pages 137-151, June.
    7. King, Mervyn A., 1983. "Welfare analysis of tax reforms using household data," Journal of Public Economics, Elsevier, vol. 21(2), pages 183-214, July.
    8. John Creedy, 2003. "The Excess Burden of Taxation and Why it (Approximately) Quadruples When the Tax Rate Doubles," Treasury Working Paper Series 03/29, New Zealand Treasury.
    9. Felicity Barker, 2002. "Consumption Externalities and the Role of Government: The Case of Alcohol," Treasury Working Paper Series 02/25, New Zealand Treasury.
    10. Creedy, John, 1998. "Measuring the Welfare Effects of Price Changes: A Convenient Parametric Approach," Australian Economic Papers, Wiley Blackwell, vol. 37(2), pages 137-151, June.
    11. Atkinson, Anthony B., 1970. "On the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 2(3), pages 244-263, September.
    12. Yoram Amiel & John Creedy & Stan Hurn, 1999. "Measuring Attitudes Towards Inequality," Scandinavian Journal of Economics, Wiley Blackwell, vol. 101(1), pages 83-96, March.
    13. Deaton, Angus, 1974. "A Reconsideration of the Empirical Implications of Additive Preferences," Economic Journal, Royal Economic Society, vol. 84(334), pages 338-348, June.
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    Cited by:

    1. Aliakbar KHOSRAVINEJAD, 2008. "Welfare Effects of Food Desubsidization For Iranian Urban Households (The Index Number and Demand System Approach)," EcoMod2008 23800063, EcoMod.
    2. Jussila, Mira & Tamminen, Saara & Kinnunen, Jouko, 2012. "The estimation of LES demand elasticities for CGE models," Working Papers 39, VATT Institute for Economic Research.

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    More about this item

    Keywords

    Excise tax; equivalent variation; inequality; petrol demand;
    All these keywords.

    JEL classification:

    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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