Advances in Economics, Management and Political Sciences
- The Open Access Proceedings Series for Conferences
Proceedings of the 2nd International Conference on Financial Technology and Business Analysis
Series Vol. 46 , 01 December 2023
Open
Access | Article
An Empirical Research on the Impact of Gasoline Taxes on Consumer-Level Retail Prices
* Author to whom correspondence should be addressed.
Abstract
This paper uses provincial-level gasoline retail price data in Canada to study the effect of tax reform on gasoline retail prices. It uses a dynamic difference-in-difference strategy to estimate the dynamic treatment effect of tax reform to see the dynamic changes of treatment effect in post-reform periods. We find that on average, the tax cut tends to be close to or around the full passthrough rate to the gasoline retail price. The treatment effect does not diminish over time and it is immediate after the tax reform. This means that the gasoline tax cut goes directly to consumers, it will work as a great macroeconomic tool in fighting the current inflation. The implications of effective gasoline taxation policy allow governments to adjust the gasoline taxation when needed to fight off inflation knowing that almost full taxation changes would pass down to the retail level. We conducted an additional robustness check to the robustness of our results.
Keywords
gasoline taxes, consumer level retail prices, dynamic difference-in-difference method
References
1. Harju, J., Kosonen, T., Laukkanen, M., & Palanne, K. (2022). The heterogeneous incidence of fuel carbon taxes: Evidence from station-level data. Journal of Environmental Economics and Management, 112, 102607.
2. Rivers, N., & Schaufele, B. (2015). Salience of carbon taxes in the gasoline market. Journal of Environmental Economics and Management, 74, 23–36.
3. Antweiler, W., & Gulati, S. (2016). Frugal Cars or Frugal Drivers? How Carbon and Fuel Taxes Influence the Choice and Use of Cars. Social Science Research Network.
4. Brons, M., Nijkamp, P., Pels, E., & Rietveld, P. (2008). A meta-analysis of the price elasticity of gasoline demand. A SUR approach. Energy Economics, 30(5), 2105–2122.
5. YCharts - Financial Research and Proposal Platform. YCharts. Retrieved from https://ycharts.com/
6. Callaway, B., & Sant’Anna, P. H. C. (2021). Difference-in-Differences with multiple time periods. Journal of Econometrics, 225(2), 200–230.
7. Coglianese, J., Davis, L. W., Kilian, L., & Stock, J. H. (2016). Anticipation, Tax Avoidance, and the Price Elasticity of Gasoline Demand. Journal of Applied Econometrics, 32(1), 1–15.
8. Schwerdt, G., & Woessmann, L. (2020). Empirical methods in the economics of education. In Elsevier eBooks (pp. 3–20).
9. Angrist, J. D., & Krueger, A. B. (1999). Empirical Strategies in Labor Economics. In Handbook of Labor Economics (pp. 1277–1366). Elsevier BV.
10. Rivers, N. & Schaufele, B. (2012). Carbon Tax Salience and Gasoline Demand. Working Papers 1211E, University of Ottawa, Department of Economics.
Data Availability
The datasets used and/or analyzed during the current study will be available from the authors upon reasonable request.
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License. Authors who publish this series agree to the following terms:
1. Authors retain copyright and grant the series right of first publication with the work simultaneously licensed under a Creative Commons Attribution License that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this series.
2. Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the series's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgment of its initial publication in this series.
3. Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See Open Access Instruction).
- Volume Title
- Proceedings of the 2nd International Conference on Financial Technology and Business Analysis
- ISBN (Print)
- 978-1-83558-139-1
- ISBN (Online)
- 978-1-83558-140-7
- Published Date
- 01 December 2023
- Series
- Advances in Economics, Management and Political Sciences
- ISSN (Print)
- 2754-1169
- ISSN (Online)
- 2754-1177
- DOI
- 10.54254/2754-1169/46/20230325
- Copyright
- 01 December 2023
- Open Access
- This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited