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Energy tax harmonization in EU: Time series and panel data evidence

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  • Bilgili, Faik

Abstract

This paper searches statistical evidence of tax harmonization initiated and motivated by EU Commission since 1980. The purpose of energy tax harmonization is to reach more efficient use of energy among members and thereby to establish more competitive markets in EU. The tax harmonization in EU, in this work, is analyzed through convergence tests to see whether total taxes applied to oil and diesel used by industries and households are adjusted among EU members. This study, therefore, employs minimum Lagrange multiplier unit root tests with structural breaks developed by Lee and Strazicich (2003). Upon observations the data for panels, it is revealed that panels for oil industry tax, diesel industry tax, oil household tax and diesel household tax converge to average total taxes of members. Time series data for individual countries, on the other hand, give both convergence and non-convergence results.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 24013.

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Date of creation: 05 Mar 2010
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Handle: RePEc:pra:mprapa:24013

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Keywords: oil and diesel taxes; households and industries; harmonization; convergence; European Union; LM unit root tests with structural breaks;

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  1. Guillaume L¿Hégaret & Boriss Siliverstovs & Anne Neumann & Christian von Hirschhausen, 2003. "International Market Integration for Natural Gas?: A Cointegration Analysis of Prices in Europe, North America and Japan," Discussion Papers of DIW Berlin 393, DIW Berlin, German Institute for Economic Research.
  2. Robin L. Lumsdaine & David H. Papell, 1997. "Multiple Trend Breaks And The Unit-Root Hypothesis," The Review of Economics and Statistics, MIT Press, vol. 79(2), pages 212-218, May.
  3. Junsoo Lee & Mark C. Strazicich, 2003. "Minimum Lagrange Multiplier Unit Root Test with Two Structural Breaks," The Review of Economics and Statistics, MIT Press, vol. 85(4), pages 1082-1089, November.
  4. Perron, P., 1990. "Further Evidence On Breaking Trend Functions In Macroeconomics Variables," Papers, Princeton, Department of Economics - Econometric Research Program 350, Princeton, Department of Economics - Econometric Research Program.
  5. Kyung-So Im & Junsoo Lee & Margie Tieslau, 2005. "Panel LM Unit-root Tests with Level Shifts," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 67(3), pages 393-419, 06.
  6. Eric Zivot & Donald W.K. Andrews, 1990. "Further Evidence on the Great Crash, the Oil Price Shock, and the Unit Root Hypothesis," Cowles Foundation Discussion Papers, Cowles Foundation for Research in Economics, Yale University 944, Cowles Foundation for Research in Economics, Yale University.
  7. De Vany, Arthur S. & Walls, W. David, 1999. "Cointegration analysis of spot electricity prices: insights on transmission efficiency in the western US," Energy Economics, Elsevier, Elsevier, vol. 21(5), pages 435-448, October.
  8. Lee, Junsoo & Strazicich, Mark C, 2001. " Break Point Estimation and Spurious Rejections with Endogenous Unit Root Tests," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 63(5), pages 535-58, December.
  9. Michael Kohlhaas & Katja Schumacher & Jochen Diekmann & Dieter Schumacher & Martin Cames, 2004. "Economic, Environmental and International Trade Effects of the EU Directive on Energy Tax Harmonization," Discussion Papers of DIW Berlin 462, DIW Berlin, German Institute for Economic Research.
  10. Bentzen, Jan, 2003. "An empirical analysis of gasoline price convergence for 20 OECD countries," Working Papers, University of Aarhus, Aarhus School of Business, Department of Economics 03-19, University of Aarhus, Aarhus School of Business, Department of Economics.
  11. Strazicich, Mark C. & Lee, Junsoo & Day, Edward, 2004. "Are incomes converging among OECD countries? Time series evidence with two structural breaks," Journal of Macroeconomics, Elsevier, Elsevier, vol. 26(1), pages 131-145, March.
  12. Axel Dreher & Tim Krieger, 2008. "Do Prices for Petroleum Products Converge in a Unified Europe with Non-Harmonized Tax Rates?," The Energy Journal, International Association for Energy Economics, International Association for Energy Economics, vol. 0(Number 1), pages 61-88.
  13. Wlazlowski, Szymon & Giulietti, Monica & Binner, Jane & Milas, Costas, 2009. "Price dynamics in European petroleum markets," Energy Economics, Elsevier, Elsevier, vol. 31(1), pages 99-108, January.
  14. Zachmann, Georg, 2008. "Electricity wholesale market prices in Europe: Convergence?," Energy Economics, Elsevier, Elsevier, vol. 30(4), pages 1659-1671, July.
  15. Lau, Evan & Baharumshah, Ahmad Zubaidi & Haw, Chan Tze, 2006. "Current account: mean-reverting or random walk behavior?," Japan and the World Economy, Elsevier, Elsevier, vol. 18(1), pages 90-107, January.
  16. Ma, Hengyun & Oxley, Les & Gibson, John, 2009. "Gradual reforms and the emergence of energy market in China: Evidence from tests for convergence of energy prices," Energy Policy, Elsevier, Elsevier, vol. 37(11), pages 4834-4850, November.
  17. Schmidt, Peter & Phillips, C B Peter, 1992. "LM Tests for a Unit Root in the Presence of Deterministic Trends," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 54(3), pages 257-87, August.
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Cited by:
  1. Bilgili, Faik, 2011. "City price convergence in Turkey with structural breaks," MPRA Paper 54295, University Library of Munich, Germany.

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