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The incidence of fuel taxation in India

Listed author(s):
  • Datta, Ashokankur
Registered author(s):

    Fuel taxes have returned to centre stage as a potential policy instrument for greenhouse gas abatement. On the basis of some studies in developed countries, critics have complained that a fuel tax would be regressive. This paper uses data from a representative household survey covering more than 124 thousand Indian households to examine this claim. It finds that a fuel tax would be progressive as would a carbon tax. Using an input-output approach, it is found that the progressivity results holds good even when one considers indirect consumption of fuel through its use as an intermediate input. Sensitivity checks allowing for differing price elasticities of demand between rich and poor confirm this result for most of fuels. A tax on kerosene is the only fuel tax that is regressive in all situations.

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    File URL: http://www.sciencedirect.com/science/article/pii/S0140-9883(09)00190-X
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    Article provided by Elsevier in its journal Energy Economics.

    Volume (Year): 32 (2010)
    Issue (Month): Supplement 1 (September)
    Pages: 26-33

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    Handle: RePEc:eee:eneeco:v:32:y:2010:i:supplement1:p:s26-s33
    Contact details of provider: Web page: http://www.elsevier.com/locate/eneco

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    1. Poterba, James M, 1989. "Lifetime Incidence and the Distributional Burden of Excise Taxes," American Economic Review, American Economic Association, vol. 79(2), pages 325-330, May.
    2. James M. Poterba, 1991. "Is the Gasoline Tax Regressive?," NBER Working Papers 3578, National Bureau of Economic Research, Inc.
    3. Gilbert E. Metcalf & Sergey Paltsev & John Reilly & Henry Jacoby & Jennifer F. Holak, 2008. "Analysis of U.S. Greenhouse Gas Tax Proposals," NBER Working Papers 13980, National Bureau of Economic Research, Inc.
    4. Steininger, Karl W. & Friedl, Birgit & Gebetsroither, Brigitte, 2007. "Sustainability impacts of car road pricing: A computable general equilibrium analysis for Austria," Ecological Economics, Elsevier, vol. 63(1), pages 59-69, June.
    5. West, Sarah E., 2004. "Distributional effects of alternative vehicle pollution control policies," Journal of Public Economics, Elsevier, vol. 88(3-4), pages 735-757, March.
    6. Goulder, Lawrence & Bovenberg, A. Lans, 2000. "Neutralizing the Adverse Industry Impacts of CO2 Abatement Policies: What Does It Cost?," Discussion Papers dp-00-27, Resources For the Future.
    7. Kangni R Kpodar, 2006. "Distributional Effects of Oil Price Changeson Household Expenditures; Evidence From Mali," IMF Working Papers 06/91, International Monetary Fund.
    8. Gundimeda, Haripriya & Kohlin, Gunnar, 2008. "Fuel demand elasticities for energy and environmental policies: Indian sample survey evidence," Energy Economics, Elsevier, vol. 30(2), pages 517-546, March.
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