Hostname: page-component-76fb5796d-vfjqv Total loading time: 0 Render date: 2024-04-26T01:20:23.447Z Has data issue: false hasContentIssue false
  • English
  • Français

The Effects of an Increase in Petrol Excise Tax: the Case of New Zealand Households

Published online by Cambridge University Press:  26 March 2020

John Creedy
Get access Rights & Permissions [Opens in a new window]

Abstract

This paper reports estimates of the potential welfare effects of hypothetical increases in the petrol excise tax in New Zealand. Equivalent variations, for a range of household types and total expenditure levels, are obtained along with distributional measures. Household demand responses are modelled using the Linear Expenditure System, where parameters vary by total expenditure level and household type. The effects on inequality were found to be negligible, but the marginal excess burdens typically ranged between 35 and 55 cents per dollar of additional revenue.

Type
Journal Article
Information
National Institute Economic Review , Volume 188 , April 2004 , pp. 73 - 82
Copyright
Copyright © 2004 National Institute of Economic and Social Research

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Footnotes

∗

This work was initially carried out while the author was employed by the New Zealand Treasury. The views, opinions, findings, and conclusions or recommendations expressed in this paper are strictly those of the author. I should like to thank Ivan Tuckwell for providing the HES data in the form required for this analysis, Statistics New Zealand for permission to use the data, Louise Lennard for providing the effective ad valorem taxexclusive rates used here, and Matthew Schofield for carrying out the many budget share regressions. I have benefited from comments by Wayne Heerdegen, David Black, John Gibson, Nathan McLellan, Martin Weale and Peter Wilson on an earlier version of this paper.

References

Allen, R.G.D. (1975), Index Numbers in Theory and Practice, London, Macmillan.CrossRefGoogle Scholar
Amiel, Y., Creedy, J. and Hurn, S. (1999), ‘ Measuring attitudes towards inequality ’, Scandinavian Journal of Economics, 101, pp. 83–96.CrossRefGoogle Scholar
Atkinson, A.B. (1970), ‘ On the measurement of inequality ’, Journal of Economic Theory, 2, pp. 244–263.CrossRefGoogle Scholar
Barker, F. (2002), ‘ Consumption externalities and the role of government: the case of alcohol ’, New Zealand Treasury Working Paper, no. 02/25.Google Scholar
Brown, J.A.C. and Deaton, A.S. (1973), ‘Models of consumer behaviour’, in Surveys of Applied Economics, I, pp. 177–268, London, Macmillan.CrossRefGoogle Scholar
Creedy, J. (1998a), ‘ Measuring the welfare effects of price changes: a convenient parametric approach ’, Australian Economic Papers, 37, pp. 137–151.CrossRefGoogle Scholar
Creedy, J. (1998b), Measuring Welfare Changes and Tax Burdens, Cheltenham, Edward Elgar.Google Scholar
Creedy, J. (2003), ‘ The excess burden of taxation and why it (approximately) quadruples when the tax rate doubles ’, New Zealand Treasury Working Paper, no. 03/29.Google Scholar
Davies, P. (2003), ‘ Efficiency implications of a petrol tax in the Auckland region: report to Auckland regional transport funding steering group ’, New Zealand Institute of Economic Research Report (September).Google Scholar
Deaton, A.S. (1974), ’ A reconsideration of the empirical implications of additive preferences ’, Economic Journal, 84, pp. 338–348.CrossRefGoogle Scholar
Deaton, A.S. and Muellbauer, J. (1980), Economics and Consumer Behaviour, Cambridge, Cambridge University Press.CrossRefGoogle Scholar
Dixon, P., Parmenter, B.R., Sutton, J. and Vincent, D.P. (1982), ORANI: A Multisectoral Model of the Australian Economy, Amsterdam, North Holland Publishing Company.Google Scholar
Fortin, B. and Truchon, M. (1993), ‘ On reforming the welfare system: workfare meets the negative income tax ’, Journal of Public Economics, 51, pp. 119–151.CrossRefGoogle Scholar
Frisch, R. (1959), ‘ A complete scheme for computing all direct and cross demand elasticities in a model with many sectors ’, Econometrica, 27, pp. 177–196.CrossRefGoogle Scholar
King, M.A. (1983), ‘ Welfare analysis of tax reforms using household data ’, Journal of Public Economics, 21, pp. 183–214.CrossRefGoogle Scholar
Jenkins, S.P. and Cowell, F.A. (1994), ‘ Parametric equivalence scales and scale relativities ’, Economic Journal, 104, pp. 891–900.CrossRefGoogle Scholar
Lluch, C., Powell, A.A. and Williams, R.A. (1977), Patterns in Household Demand and Saving, Oxford, Oxford University Press for the World Bank.Google Scholar
Powell, A.A. (1974), Empirical Analytics of Demand Systems, Lexington, Massachusetts, Lexington Books.Google Scholar
Roberts, K. (1980), ‘ Price-independent welfare prescriptions ’, Journal of Public Economics, 18, pp. 277–297.Google Scholar
Tulpule, A. and Powell, A.A. (1978), ‘Estimates of household demand elasticities for the Orani model’, IMPACT Project Preliminary Working Paper, OP-22.Google Scholar
Williams, R.A. (1978), ‘The use of disaggregated cross-section data in explaining shifts in Australian consumer demand patterns over time’, Impact Project Research Paper, SP-13.Google Scholar
Young, L. (2002), ‘Ad valorem indirect tax rates in New Zealand’, New Zealand Treasury Internal Paper (#435217).Google Scholar