$2.00 gas! : studying the effects of gas tax moratorium
Despite the considerable attention paid to the theory of tax incidence, there are surprisingly few estimates of the pass-through rate of sales taxes on retail prices. This paper estimates the effect of a suspension and subsequent reinstatement of the gasoline sales tax in Illinois and Indiana on ret...
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| Other Authors: | |
| Format: | Working Paper |
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MIT Center for Energy and Environmental Policy Research
2009
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| Online Access: | http://hdl.handle.net/1721.1/45047 |
| _version_ | 1811095019735482368 |
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| author | Doyle, Joseph J. Samphantharak, Krislert |
| author2 | Massachusetts Institute of Technology. Center for Energy and Environmental Policy Research. |
| author_facet | Massachusetts Institute of Technology. Center for Energy and Environmental Policy Research. Doyle, Joseph J. Samphantharak, Krislert |
| author_sort | Doyle, Joseph J. |
| collection | MIT |
| description | Despite the considerable attention paid to the theory of tax incidence, there are surprisingly few estimates of the pass-through rate of sales taxes on retail prices. This paper estimates the effect of a suspension and subsequent reinstatement of the gasoline sales tax in Illinois and Indiana on retail prices. Earlier laws set the timing of the reinstatements, providing plausibly exogenous changes in the tax rates. Using a unique dataset of daily gasoline prices at the station level, retail gas prices are found to drop by 3% following the elimination of the 5% sales tax, and increase by 4% following the reinstatements, compared to neighboring states. Some evidence also suggests that the tax reinstatements are associated with higher prices up to an hour into neighboring states, which provides some evidence on the size of the geographic market for gasoline. Effects across different competitive environments are considered as well. |
| first_indexed | 2024-09-23T16:09:13Z |
| format | Working Paper |
| id | mit-1721.1/45047 |
| institution | Massachusetts Institute of Technology |
| last_indexed | 2024-09-23T16:09:13Z |
| publishDate | 2009 |
| publisher | MIT Center for Energy and Environmental Policy Research |
| record_format | dspace |
| spelling | mit-1721.1/450472019-04-12T09:56:15Z $2.00 gas! : studying the effects of gas tax moratorium Doyle, Joseph J. Samphantharak, Krislert Massachusetts Institute of Technology. Center for Energy and Environmental Policy Research. Despite the considerable attention paid to the theory of tax incidence, there are surprisingly few estimates of the pass-through rate of sales taxes on retail prices. This paper estimates the effect of a suspension and subsequent reinstatement of the gasoline sales tax in Illinois and Indiana on retail prices. Earlier laws set the timing of the reinstatements, providing plausibly exogenous changes in the tax rates. Using a unique dataset of daily gasoline prices at the station level, retail gas prices are found to drop by 3% following the elimination of the 5% sales tax, and increase by 4% following the reinstatements, compared to neighboring states. Some evidence also suggests that the tax reinstatements are associated with higher prices up to an hour into neighboring states, which provides some evidence on the size of the geographic market for gasoline. Effects across different competitive environments are considered as well. 2009-04-03T17:07:04Z 2009-04-03T17:07:04Z 2005 Working Paper 2005-017 http://hdl.handle.net/1721.1/45047 68721391 MIT-CEEPR (Series) ; 05-017WP. 37, [11] p application/pdf MIT Center for Energy and Environmental Policy Research |
| spellingShingle | Doyle, Joseph J. Samphantharak, Krislert $2.00 gas! : studying the effects of gas tax moratorium |
| title | $2.00 gas! : studying the effects of gas tax moratorium |
| title_full | $2.00 gas! : studying the effects of gas tax moratorium |
| title_fullStr | $2.00 gas! : studying the effects of gas tax moratorium |
| title_full_unstemmed | $2.00 gas! : studying the effects of gas tax moratorium |
| title_short | $2.00 gas! : studying the effects of gas tax moratorium |
| title_sort | 2 00 gas studying the effects of gas tax moratorium |
| url | http://hdl.handle.net/1721.1/45047 |
| work_keys_str_mv | AT doylejosephj 200gasstudyingtheeffectsofgastaxmoratorium AT samphantharakkrislert 200gasstudyingtheeffectsofgastaxmoratorium |