Using the gasoline tax to reduce the US federal government's budget deficit

Noel D. Uri and Roy Boyd

Applied Energy, 1993, vol. 46, issue 3, 215-239

Abstract: The analysis presented in this paper examines the US impact of raising the excise tax on gasoline on the US economy. The analytical approach used in the analysis consists of a computable general equilibrium model composed of fourteen producing sectors, fourteen consuming sectors, six household categories classified by income and the government. The effects of a 50 cents per gallon increase in the excise tax on gasoline on prices and quantities include a lower output by the producing sectors (by about $35·0 billion), a reduction in the consumption of goods and services (by about $28·6 billion), and a reduction in welfare (by about $51·7 billion). The govenment would realize an increase in revenue of about $17·3 billion. When subjected to a sensitivity analysis, the results are reasonably robust with regard to the assumption of the values of the substitution elasticities.

Date: 1993
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