IDEAS home Printed from https://ideas.repec.org/a/hpe/journl/y2019v229i2p11-32.html
   My bibliography  Save this article

Differential Effects of Federal and State Gasoline Taxes on Gasoline Consumption

Author

Listed:
  • Susan Xu Tang

    (Georgia State University)

  • David L. Sjoquist

    (Georgia State University)

Abstract

Previous studies find that gasoline consumption is more responsive to the gasoline tax than the tax¬exclusive price. We examine this topic more extensively by considering the differential effects of the tax-exclusive price, federal gasoline excise tax, and total state taxes on gasoline. We find some evidence that the response to changes in the federal excise tax is larger than to changes in state taxes and the tax-exclusive price. We also consider the three specific state taxes and fees on gasoline: excise tax, sales tax, and fees.

Suggested Citation

  • Susan Xu Tang & David L. Sjoquist, 2019. "Differential Effects of Federal and State Gasoline Taxes on Gasoline Consumption," Hacienda Pública Española / Review of Public Economics, IEF, vol. 229(2), pages 11-32, June.
    • Handle: RePEc:hpe:journl:y:2019:v:229:i:2:p:11-32
    as

    Download full text from publisher

    File URL: https://www.ief.es/docs/destacados/publicaciones/revistas/hpe/229_Art1.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Marion, Justin & Muehlegger, Erich, 2011. "Fuel tax incidence and supply conditions," Journal of Public Economics, Elsevier, vol. 95(9), pages 1202-1212.
    2. Philip DeCicca & Don Kenkel, 2015. "Synthesizing Econometric Evidence: The Case of Demand Elasticity Estimates," Risk Analysis, John Wiley & Sons, vol. 35(6), pages 1073-1085, June.
    3. Jacob Goldin & Tatiana Homonoff, 2013. "Smoke Gets in Your Eyes: Cigarette Tax Salience and Regressivity," American Economic Journal: Economic Policy, American Economic Association, vol. 5(1), pages 302-336, February.
    4. Åsa Lofgren & Katarina Nordblom, 2009. "Puzzling tax attitudes and labels," Applied Economics Letters, Taylor & Francis Journals, vol. 16(18), pages 1809-1812.
    5. Ronald C. Fisher & Robert W. Wassmer, 2017. "Does Perception of Gas Tax Paid Influence Support for Funding Highway Improvements?," Public Finance Review, , vol. 45(4), pages 511-537, July.
    6. Devereux, Michael P. & Lockwood, Ben & Redoano, Michela, 2008. "Do countries compete over corporate tax rates?," Journal of Public Economics, Elsevier, vol. 92(5-6), pages 1210-1235, June.
    7. Chouinard, Hayley & Perloff, Jeffrey M., 2004. "Incidence of federal and state gasoline taxes," Economics Letters, Elsevier, vol. 83(1), pages 55-60, April.
    8. John A. Tauras & Michael F. Pesko & Jidong Huang & Frank J. Chaloupka & Matthew C. Farrelly, 2016. "The Effect of Cigarette Prices on Cigarette Sales: Exploring Heterogeneity in Price Elasticities at High and Low Prices," NBER Working Papers 22251, National Bureau of Economic Research, Inc.
    9. Alejandro Esteller-Moré & Leonzio Rizzo, 2014. "US excise tax horizontal interdependence: yardstick versus tax competition," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 52(3), pages 711-737, May.
    10. James Alm & Edward Sennoga & Mark Skidmore, 2009. "Perfect Competition, Urbanization, And Tax Incidence In The Retail Gasoline Market," Economic Inquiry, Western Economic Association International, vol. 47(1), pages 118-134, January.
    11. James Alm & Carolyn J. Bourdeaux, 2013. "Applying Behavioral Economics to the Public Sector," Hacienda Pública Española / Review of Public Economics, IEF, vol. 206(3), pages 91-134, September.
    12. Mark D. Manuszak & Charles C. Moul, 2009. "How Far for a Buck? Tax Differences and the Location of Retail Gasoline Activity in Southeast Chicagoland," The Review of Economics and Statistics, MIT Press, vol. 91(4), pages 744-765, November.
    13. Doyle Jr., Joseph J. & Samphantharak, Krislert, 2008. "$2.00 Gas! Studying the effects of a gas tax moratorium," Journal of Public Economics, Elsevier, vol. 92(3-4), pages 869-884, April.
    14. Congdon, William J. & Kling, Jeffrey R. & Mullainathan, Sendhil, 2009. "Behavioral Economics and Tax Policy," National Tax Journal, National Tax Association;National Tax Journal, vol. 62(3), pages 375-386, September.
    15. Lucas W. Davis & Lutz Kilian, 2011. "Estimating the effect of a gasoline tax on carbon emissions," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 26(7), pages 1187-1214, November.
    16. Anderson, Soren T. & Kellogg, Ryan & Sallee, James M., 2013. "What do consumers believe about future gasoline prices?," Journal of Environmental Economics and Management, Elsevier, vol. 66(3), pages 383-403.
    17. Raj Chetty & Adam Looney & Kory Kroft, 2009. "Salience and Taxation: Theory and Evidence," American Economic Review, American Economic Association, vol. 99(4), pages 1145-1177, September.
    18. Shanjun Li & Joshua Linn & Erich Muehlegger, 2014. "Gasoline Taxes and Consumer Behavior," American Economic Journal: Economic Policy, American Economic Association, vol. 6(4), pages 302-342, November.
    19. Davies, Ronald B. & Vadlamannati, Krishna Chaitanya, 2013. "A race to the bottom in labor standards? An empirical investigation," Journal of Development Economics, Elsevier, vol. 103(C), pages 1-14.
    20. Gallagher, Kelly Sims & Muehlegger, Erich, 2011. "Giving green to get green? Incentives and consumer adoption of hybrid vehicle technology," Journal of Environmental Economics and Management, Elsevier, vol. 61(1), pages 1-15, January.
    21. Rivers, Nicholas & Schaufele, Brandon, 2015. "Salience of carbon taxes in the gasoline market," Journal of Environmental Economics and Management, Elsevier, vol. 74(C), pages 23-36.
    22. Tosun Mehmet S & Skidmore Mark L, 2007. "Cross-Border Shopping and the Sales Tax: An Examination of Food Purchases in West Virginia," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 7(1), pages 1-20, December.
    23. Ackermann, Hagen & Fochmann, Martin & Mihm, Benedikt, 2013. "Biased effects of taxes and subsidies on portfolio choices," Economics Letters, Elsevier, vol. 120(1), pages 23-26.
    24. Kirchler, Erich, 1998. "Differential representations of taxes: Analysis of free associations and judgments of five employment groups," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 27(1), pages 117-131.
    25. Scott, K. Rebecca, 2012. "Rational habits in gasoline demand," Energy Economics, Elsevier, vol. 34(5), pages 1713-1723.
    26. Ghalwash, Tarek, 2007. "Energy taxes as a signaling device: An empirical analysis of consumer preferences," Energy Policy, Elsevier, vol. 35(1), pages 29-38, January.
    27. Kallbekken, Steffen & Kroll, Stephan & Cherry, Todd L., 2011. "Do you not like Pigou, or do you not understand him? Tax aversion and revenue recycling in the lab," Journal of Environmental Economics and Management, Elsevier, vol. 62(1), pages 53-64, July.
    28. Rosen, Harvey S, 1976. "Tax Illusion and the Labor Supply of Married Women," The Review of Economics and Statistics, MIT Press, vol. 58(2), pages 167-172, May.
    29. Amy Finkelstein, 2009. "E-ztax: Tax Salience and Tax Rates," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 124(3), pages 969-1010.
    30. Rietveld, P. & Bruinsma, F. R. & van Vuuren, D. J., 2001. "Spatial graduation of fuel taxes; consequences for cross-border and domestic fuelling," Transportation Research Part A: Policy and Practice, Elsevier, vol. 35(5), pages 433-457, June.
    31. Banfi, Silvia & Filippini, Massimo & Hunt, Lester C., 2005. "Fuel tourism in border regions: The case of Switzerland," Energy Economics, Elsevier, vol. 27(5), pages 689-707, September.
    32. Ghalwash, Tarek, 2004. "Energy Taxes as a Signaling Device: An Empirical Analysis of Consumer Preferences," Umeå Economic Studies 646, Umeå University, Department of Economics.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Shanjun Li & Joshua Linn & Erich Muehlegger, 2014. "Gasoline Taxes and Consumer Behavior," American Economic Journal: Economic Policy, American Economic Association, vol. 6(4), pages 302-342, November.
    2. Rivers, Nicholas & Schaufele, Brandon, 2015. "Salience of carbon taxes in the gasoline market," Journal of Environmental Economics and Management, Elsevier, vol. 74(C), pages 23-36.
    3. Tiezzi, Silvia & Verde, Stefano F., 2016. "Differential demand response to gasoline taxes and gasoline prices in the U.S," Resource and Energy Economics, Elsevier, vol. 44(C), pages 71-91.
    4. Houde, Sebastien & Aldy, Joseph E., 2017. "The Efficiency Consequences of Heterogeneous Behavioral Responses to Energy Fiscal Policies," Working Paper Series rwp17-047, Harvard University, John F. Kennedy School of Government.
    5. Houde, Sebastien & Aldy, Joseph E., 2017. "The Efficiency Consequences of Heterogeneous Behavioral Responses to Energy Fiscal Policies," RFF Working Paper Series 17-24, Resources for the Future.
    6. Ahundjanov, Behzod B. & Noel, Michael D., 2021. "What’s in a name? The incidence of gasoline excise taxes versus gasoline carbon levies," International Journal of Industrial Organization, Elsevier, vol. 76(C).
    7. Silvia Tiezzi & Stefano F. Verde, 2017. "The signaling effect of gasoline taxes and its distributional implications," RSCAS Working Papers 2017/06, European University Institute.
    8. Rebecca K Scott, 2014. "Tax Salience vs. Price Uncertainty: Disentangling the Effects of Attention and Rational Habits," Economics Series Working Papers 736, University of Oxford, Department of Economics.
    9. Harju, Jarkko & Kosonen, Tuomas & Laukkanen, Marita & Palanne, Kimmo, 2022. "The heterogeneous incidence of fuel carbon taxes: Evidence from station-level data," Journal of Environmental Economics and Management, Elsevier, vol. 112(C).
    10. Silvia Tiezzi & Stefano F. Verde, 2019. "The signaling effect of gasoline taxes and its distributional implications," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 17(2), pages 145-169, June.
    11. Silvia Tiezzi & Stefano F. Verde, 2019. "The signaling effect of gasoline taxes and its distributional implications," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 17(2), pages 145-169, June.
    12. Kilian, Lutz & Zhou, Xiaoqing, 2024. "Heterogeneity in the pass-through from oil to gasoline prices: A new instrument for estimating the price elasticity of gasoline demand," Journal of Public Economics, Elsevier, vol. 232(C).
    13. Don Fullerton & Erich Muehlegger, 2017. "Who Bears the Economic Costs of Environmental Regulations?," NBER Working Papers 23677, National Bureau of Economic Research, Inc.
    14. Baranzini, Andrea & Weber, Sylvain, 2013. "Elasticities of gasoline demand in Switzerland," Energy Policy, Elsevier, vol. 63(C), pages 674-680.
    15. Alberini, Anna & Horvath, Marco, 2021. "All car taxes are not created equal: Evidence from Germany," Energy Economics, Elsevier, vol. 100(C).
    16. Allcott, Hunt & Mullainathan, Sendhil & Taubinsky, Dmitry, 2014. "Energy policy with externalities and internalities," Journal of Public Economics, Elsevier, vol. 112(C), pages 72-88.
    17. Nicholas Rivers & Brandon Schaufele, 2012. "Carbon Tax Salience and Gasoline Demand," Working Papers 1211E, University of Ottawa, Department of Economics.
    18. Frondel, Manuel & Thiel, Patrick & Vance, Colin, 2024. "Heterogeneous pass-through over space and time: The case of Germany's fuel tax discount," Ruhr Economic Papers 1087, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    19. Pier Basaglia & Sophie M. Behr & Moritz A. Drupp, 2023. "De-Fueling Externalities: How Tax Salience and Fuel Substitution Mediate Climate and Health Benefits," Discussion Papers of DIW Berlin 2041, DIW Berlin, German Institute for Economic Research.
    20. Erutku, Can, 2019. "Carbon pricing pass-through: Evidence from Ontario and Quebec's wholesale gasoline markets," Energy Policy, Elsevier, vol. 132(C), pages 106-112.

    More about this item

    Keywords

    Excise tax; gasoline consumption; tax aversion;
    All these keywords.

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hpe:journl:y:2019:v:229:i:2:p:11-32. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Miguel Gómez de Antonio (email available below). General contact details of provider: https://edirc.repec.org/data/iefgves.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.