Estimates from a Consumer Demand System: Implications for the Incidence of Environmental Taxes

West, Sarah E.; Williams, Roberton C.

doi:10.3386/w9152

Cited by 67 publications

(78 citation statements)

References 11 publications

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“…West and Williams (2004) report that the presence of children increases the share of gasoline in a households budget, which is in apparent contradiction to our findings. There is however a difference between the explanatory variables in the two econometric specifications.…”

contrasting

confidence: 57%

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Gasoline Demand with Heterogeneity in Household Responses

Wadud

Graham

Noland³

2010

The Energy Journal

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Fuel demand elasticities are typically based on aggregate data to determine consumer responses to tax increases or price shocks. However, this fails to capture the detailed distributional effect on different socio-economic groups, which is often needed to fully understand the impact of fuel tax measures. This paper presents results from a household level gasoline demand model which accommodates variation in price and income elasticity with increasing income as well as for different socio-economic groups in the USA. We find substantial heterogeneity in price and income elasticities based on demographic groupings and income groups.

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contrasting

confidence: 57%

“…al. 1995, Puller and Greening 1999, Schmalensee and Stoker 1999, Kayser 2000, West and Williams 2004. We also use the number of automobiles, vans or SUV's as an explanatory variable but specify the presence of other types of vehicles through a dummy variable.…”

Section: The Econometric Modelmentioning

confidence: 99%

Gasoline Demand with Heterogeneity in Household Responses

Wadud

Graham

Noland³

2010

The Energy Journal

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“…This view is, however, contested as the efficiency of the consumption taxes enables public authorities to implement compensation and redistribution schemes (Bankman and Weisbach 2005;Decoster et al 2010;Corbacho et al 2013). Those schemes are in particular needed in the case of the development of environmental consumption taxes (Ekins and Dresner 2004;West and Williams 2004;Büchs et al 2011;Kosonen 2012;Dissou and Siddiqui 2014;Beck et al 2015;Yusuf and Resosudarmo 2015). In the DaVAT framework, the important thing to keep in mind is that the increase in most polluting products' prices is associated with a decrease in the price of the (most numerous) low-polluting products previously subject to VAT, which has redistributive properties.…”

Section: Acceptability Of the Proposalmentioning

confidence: 99%

From value-added tax to a damage and value-added tax partially based on life cycle assessment: principles and feasibility

Timmermans

Achten

2018

Int J Life Cycle Assess

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Purpose The purpose of this article is to examine the arguments in favor of a shift from value-added tax (VAT) or sales tax to a damage and value-added tax (DaVAT) partially based on the life cycle assessment (LCA) of goods and services. With this shift, goods and services that seriously harm the environment and human health will be priced up, those that impact them less will be priced down. The paper recalls the proposal made by De Camillis and Goralczyk (Int J Life Cycle Assess 18: [263][264][265][266][267][268][269][270][271][272] 2013) to differentiate the VAT rate associated with products according to their environmental impacts over their life cycle. The paper suggests a new way to convert VAT into DaVAT, examines the operating principles of such a system, and considers its practical feasibility. The new policy tool based on LCA presented is intended to be applied to every country wishing to reform its consumption tax system in order to strive for a more sustainable future. Some aspects specific to countries having the same currency, notably the Euro zone, are also discussed. Methods The proposal of De Camillis and Goralczyk is discussed from the perspective of both environmental performance and compliance with LCA standards. To overcome the identified difficulties, a new way of adapting VAT (or consumption taxes in general) according to LCA is suggested. The proposal relies on three essential points: (i) apply VAT (or consumption taxes in general) to all goods and services and reduce its multiple rates to one single low rate (e.g., 3%) called uniform VAT (UVAT); (ii) add to UVAT a per-unit tax called global damage tax (GDT) calculated on the basis of environmental impacts assessed by means of specific or generic LCAs. In the case of potentially high-polluting products or industries, a specific LCA will be automatically imposed. The obligation to assess high-polluting activities already exists in many countries with, e.g., environmental impact studies, but the impacts are not necessarily evaluated by LCA; (iii) in order to reflect environmental, social, or ethical concerns specific to a country, another damage tax termed specific damage tax (SDT) is proposed that extends beyond LCA. DaVAT is the sum of UVAT, GDT, and SDT. DaVAT is conceived not as an additional burden but rather as a shift of taxation, as the rate of the old consumption taxes can decrease proportionally to the increase of GDT. DaVAT is also designed in such a way that the erosion of tax revenues, when pollutant would decline, is offset by the extension of the tax to all goods and services and by the possibility to gradually re-increase the UVAT rate when the number of highly polluting products decreases. Results and discussion The proposal is examined first from a theoretical point of view by considering which principles should be used to comply with LCA standards and general requirements of (environmental) tax policies. Four general principles emerge: consistency in the choice of the functional unit and in the characterization, n...

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“…West (2004) and West and Williams (2004) pointed out that lower-income households have more elastic gasoline demand than higherincome households, and that this lowers the burden they bear from a price increase, making the gas tax less regressive than if the elasticity were constant across incomes.…”

Section: B Distributional Implications Of Motor Fuel Taxesmentioning

confidence: 99%

“…West and Williams (2004) find that the burden of a gas tax is highest for the secondlowest income quintile and lowest for the top quintile, though it is relatively flat across the bottom four quintiles: they estimate that raising the gas tax to the efficient rate (an increase of roughly $1/gallon) would impose a burden of 2.78% of annual expenditures for the bottom quintile, and 3.01% 2.88%, 2.49% and 1.60% for the second through fifth quintiles, respectively.…”

Section: B Distributional Implications Of Motor Fuel Taxesmentioning

confidence: 99%

Environmental Taxation

Williams¹

2016

Self Cite

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This paper examines potential environmental tax policy reforms. It focuses primarily on a carbon tax, but also more briefly considers a range of other possible changes. These include revising or eliminating various energy and environmental tax credits and deductions (many of which might become unnecessary in the presence of a carbon tax), as well as changes to energy taxes that have substantial environmental implications (such as the federal gasoline tax). The paper draws on recent theoretical and empirical research to evaluate the effects of such reforms on tax revenue, pollution emissions, economic efficiency, and income distribution.

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Estimates from a Consumer Demand System: Implications for the Incidence of Environmental Taxes

Cited by 67 publications

References 11 publications

Gasoline Demand with Heterogeneity in Household Responses

Gasoline Demand with Heterogeneity in Household Responses

From value-added tax to a damage and value-added tax partially based on life cycle assessment: principles and feasibility

Environmental Taxation

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