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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
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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

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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.

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