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Excise Tax Policy and Cross-border Purchases of Automotive Fuels

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  • Joze Mencinger

Abstract

In a small open country such as Slovenia, drivers can either purchase automotive fuel within the country or abroad. A simple demand model is used to test the proposition that changes in excise tax policy caused the decline of purchases in the country, and to delineate the effects of excise tax policy from the effects of the simultaneously occurring economic crisis. To do that, short- and long-run, and direct- and cross-price elasticities are estimated for the purchase of gasoline and automotive diesel in five regions: Slovenia's four border regions and the interior. For the estimation of "volume of transportation" elasticity, vehicle crossings through road sites with automatic traffic meters are used. The simulations indicate that more than half of the decline in the purchase of automotive fuels in 2009 can be attributed to excise tax policy and less than half to the economic crisis, and that the increase in tax revenues generated by excise tax policy significantly exceeded the decrease in the sellers' earnings.

Suggested Citation

  • Joze Mencinger, 2010. "Excise Tax Policy and Cross-border Purchases of Automotive Fuels," ICER Working Papers 20-2010, ICER - International Centre for Economic Research.
    • Handle: RePEc:icr:wpicer:20-2010
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes

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