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Petrol consumption and redistributive effects of its taxation in Spain

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Author Info

  • Javier Asensio

    (Departament d'Economia Aplicada, Universitat Autonoma de Barcelona)

  • Anna Matas

    ()
    (Departament d'Economia Aplicada, Universitat Autonoma de Barcelona)

  • José Luis Raymond

    ()
    (Departament d’Economia i Història Econòmica, Universitat Autonoma de Barcelona)

Abstract

The objective of this paper is to estimate a petrol consumption function for Spain and to evaluate the redistributive effects of petrol taxation. We use micro data from the Spanish Household Budget Survey of 1990/91 and model petrol consumption taking into account the effect that income changes may have on car ownership levels, as well as the differences that exist between expenditure and consumption. Our results show the importance that household structure, place of residence and income have on petrol consumption. We are able to compute income elasticities of petrol expenditure, both conditional and unconditional on the level of car ownership. Non-conditional elasticities, while always very close to unit values, are lower for higher income households and for those living in rural areas or small cities. When car ownership levels are taken into account, conditional elasticities are obtained that are around one half the value of the non- conditional ones, being fairly stable across income categories and city sizes. As regards the redistributive effects of petrol taxation, we observe that for the lowest income deciles the share of petrol expenditure increases with income, and thus the tax can be regarded as progressive. However, after a certain income level the tax proves to be regressive.

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File URL: http://www.ecap.uab.es/RePEc/doc/wp0109.pdf
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Bibliographic Info

Paper provided by Department of Applied Economics at Universitat Autonoma of Barcelona in its series Working Papers with number wp0109.

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Length: 33 pages
Date of creation: Apr 2001
Date of revision:
Handle: RePEc:uab:wprdea:wp0109

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Keywords: petrol consumption; redistributive effects; Spain.;

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  1. Michael K. Berkowitz & Nancy Gallini & Eric Miller & Rob Wolfe, 1990. "Disaggregate Analysis of the Demand for Gasoline," Canadian Journal of Economics, Canadian Economics Association, vol. 23(2), pages 253-75, May.
  2. Blundell, Richard & Meghir, Costas, 1987. "Bivariate alternatives to the Tobit model," Journal of Econometrics, Elsevier, vol. 34(1-2), pages 179-200.
  3. Dahl, Carol & Sterner, Thomas, 1991. "Analysing gasoline demand elasticities: a survey," Energy Economics, Elsevier, vol. 13(3), pages 203-210, July.
  4. McCarthy, Patrick S, 1996. "Market Price and Income Elasticities of New Vehicles Demand," The Review of Economics and Statistics, MIT Press, vol. 78(3), pages 543-47, August.
  5. Richard Schmalensee & Thomas M. Stoker, 1999. "Household Gasoline Demand in the United States," Econometrica, Econometric Society, vol. 67(3), pages 645-662, May.
  6. Archibald, Robert & Gillingham, Robert, 1980. "An Analysis of the Short-Run Consumer Demand for Gasoline Using Household Survey Data," The Review of Economics and Statistics, MIT Press, vol. 62(4), pages 622-28, November.
  7. John F. Ermisch & Robert E. Wright, 1993. "Wage Offers and Full-Time and Part-Time Employment by British Women," Journal of Human Resources, University of Wisconsin Press, vol. 28(1), pages 111-133.
  8. Kayser, Hilke A., 2000. "Gasoline demand and car choice: estimating gasoline demand using household information," Energy Economics, Elsevier, vol. 22(3), pages 331-348, June.
  9. Poterba, J.M., 1990. "Is The Gasoline Tax Regressive?," Working papers 568, Massachusetts Institute of Technology (MIT), Department of Economics.
  10. Chernick, Howard & Reschovsky, Andrew, 1997. "Who Pays the Gasoline Tax?," National Tax Journal, National Tax Association, vol. 50(2), pages 233-59, June.
  11. Puhani, Patrick A, 2000. " The Heckman Correction for Sample Selection and Its Critique," Journal of Economic Surveys, Wiley Blackwell, vol. 14(1), pages 53-68, February.
  12. Casler, Stephen D. & Rafiqui, Aisha, 1993. "Evaluating Fuel Tax Equity: Direct and Indirect Distributional Effects," National Tax Journal, National Tax Association, vol. 46(2), pages 197-205, June.
  13. Puller, Steven L. & Greening, Lorna A., 1999. "Household adjustment to gasoline price change: an analysis using 9 years of US survey data," Energy Economics, Elsevier, vol. 21(1), pages 37-52, February.
  14. Espey, Molly, 1998. "Gasoline demand revisited: an international meta-analysis of elasticities," Energy Economics, Elsevier, vol. 20(3), pages 273-295, June.
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Cited by:
  1. Albrecht, Johan, 2006. "The use of consumption taxes to re-launch green tax reforms," International Review of Law and Economics, Elsevier, vol. 26(1), pages 88-103, March.

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