Fuel Tax Incidence and Supply Conditions

By J. Marion, Erich Muehlegger. 2011

233 citations recorded by the source corpus.

The incidence of taxes on consumers and producers plays a central role in evaluating energy tax policy, yet the literature testing the main predictions of the tax incidence model is sparse. In this paper, we examine the pass-through rate of state gasoline and diesel taxes to retail prices, and importantly we estimate the dependence of pass-through on factors constraining the gasoline and diesel supply chains. We consider several factors that alter the elasticity of supply, including within state heterogeneity in gasoline content requirements, refinery capacity utilization, inventory constraints, and variation in the demand for untaxed uses of diesel. In general, we find that in periods of time when the supply chain is constrained, and the constraint is plausibly unrelated to shifts in demand, the pass-through rate of fuel taxes declines. We describe several potential implications for tax policy, including tax breaks during peak driving season and during times of supply disruptions such as after major hurricanes.

Subfields: Economics and Econometrics, Electrical and Electronic Engineering, Renewable Energy, Sustainability and the Environment

View Paper: https://www.semanticscholar.org/paper/e885b4831f9b5c5b9a1475414a3e8e7aa99c3199

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Citations in the corpus

Expecting the Unexpected: Emissions Uncertainty and Environmental Market Design (2019, background): “Many studies on pass-through of fuel taxes and crude oil price changes, including Borenstein, Cameron and Gilbert (1997), Lewis (2011), and Marion and Muehlegger (2011), have found pass-through to retail price equal or very close to 100%.”
Salience of Carbon Taxes in the Gasoline Market (2015, unknown): “Marion and Muehlegger (2011) make a similar assertion in their analysis of the incidence of excise taxes.”
Gasoline Taxes and Consumer Behavior (2014, unknown): “Our analysis in the previous section as well as that in Marion and Muehlegger (2011) provide strong evidence that state taxes are fully (and rapidly) passed on to consumers.”
What Goes Up May Not Come Down: Asymmetric Incidence of Value-Added Taxes (2020, unknown): “4 uments non-standard responses to consumption taxes – such as in Chetty et al. (2009), Marion and Muehlegger (2011), Li et al. (2014), Feldman and Ruffle (2015), Taubinsky and Rees-Jones (2015), Harju et al. (2017) and Kopczuk et al. (2016).”
Mansion Tax: The Effect of Transfer Taxes on the Residential Real Estate Market (2014, background): “Moving from a price of $350,000 to $350,001 increases the buyer’s tax liability by $630.”
Pass-Through of Emissions Costs in Electricity Markets (2014, unknown): “, 2010), merger assessment (Jaffe and Weyl, 2013), or the quantification of cartel damages (Verboven and van Dijk, 2009); in International Economics, a key question is whether exchange-rate fluctuations are passedthrough to the prices of imported goods (Goldberg and Knetter, 1997); and in Public Eco”
Decarbonizing intraregional freight systems with a focus on modal shift (2018, background): “However, some studies suggest that tax increases are rapidly and fully reflected in shipping prices [172].”