$2.00 Gas! Studying the Effects of a Gas Tax Moratorium

By Joseph J. Doyle, Krislert Samphantharak. 2008

180 citations recorded by the source corpus.

There are surprisingly few estimates of the effect of sales taxes on retail prices, especially at the firm level. Further, along both sides of a state border, a change in one state%u2019s sales tax can shed light on the nature of competition, as a subset of firms effectively experiences a change in its marginal cost. This paper considers the suspension, and subsequent reinstatement, of the 5% gasoline sales tax in Illinois and Indiana following a temporary price spike in the spring of 2000. Earlier laws set the timing of the reinstatements, providing plausibly exogenous changes in the tax rates. Using a unique dataset of daily, gas station-level data, retail gas prices are found to drop by 3% following the suspension, and increase by 4% following the reinstatements. After linking the stations to driving distance data, some evidence suggests that the tax increases are associated with higher prices up to an hour%u2019s drive into neighboring states.

Subfields: Economics and Econometrics, Renewable Energy, Sustainability and the Environment

View Paper: https://www.semanticscholar.org/paper/f4810b1bca9bb585ab473a188f238261e1ae27b2

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Economics and Econometrics

1. Erich Muehlegger
2. J. Marion

In Renewable Energy, Sustainability and the Environment

1. Erich Muehlegger
2. J. Marion

Citations in the corpus

• Attention Variation and Welfare: Theory and Evidence from a Tax Salience Experiment (2016, unknown): “Studies that estimate pass-through of not-fully-salient sales taxes into the after-tax price—given by εS,p−(1−E[θ |p,t])εD,p εS,p−εD,p , find estimates ranging from 70% to 100% (Besley and Rosen, 1999; Doyle and Samphantharak, 2008).”
• Fuel Tax Incidence and Supply Conditions (2011, background): “As noted by Doyle and Samphantharak (2008), one concern with regressing price changes on contemporaneous tax changes, as we do in this paper, is the possibility that taxes are set with current demand and supply conditions in mind.”
• Estimating the effect of a gasoline tax on carbon emissions (2011, unknown): “First, 13Using evidence from gasoline sales tax moratorium in Illinois and Indiana, Doyle and Samphantharak (2008) find that 70% or more of state tax is borne by buyers.”
• Who Really Benefits from Consumption Tax Cuts? Evidence from a Large VAT Reform in France (2016, unknown): “…and Sillard (2014) for an analysis of the price effect of the 2009 VAT cut for French sit-down restaurants; see Carbonnier (2007, 2008) for estimates of the effects of other VAT changes on prices in France; and see Chouinard and Perloff (2004), Doyle and Samphantharak (2008), Kopczuk et al.”
• Gasoline Taxes and Consumer Behavior (2014, unknown): “Finally, Doyle and Samphantharak (2008) use gasoline tax moratoria that were granted in Illinois and Indiana in 2000 to estimate the incidence of gasoline taxes.”