The distributional incidence of the gasoline tax in Chile

Claudio Agostini and Johanna Jiménez

Energy Policy, 2015, vol. 85, issue C, 243-252

Abstract: This paper analyzes the distributional incidence of the excise tax on gasoline in Chile using Household Budget Surveys. The incidence is calculated with respect to both income and expenditure distributions in order to consider the potential differences between transitory and permanent income. The Suits Index is estimated as a measure of the degree of progressivity of the tax, and confidence intervals are calculated using a bootstrap methodology to statistically compare changes in the incidence given changes in the tax. The results show that the tax, contrary to the evidence for several developed countries, is slightly or moderately progressive, with a lower degree of progressivity observed in the calculations based on income than those based on expenditure. The simulation of the 25% reduction in the tax rate implemented in 2008 shows that, in terms of incidence, its effect is to reduce the progressivity of the gasoline tax, which is the opposite of what was sought by the government with this policy.

Keywords: Tax incidence; Tax on fuels; Suits Index (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (20)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:enepol:v:85:y:2015:i:c:p:243-252

DOI: 10.1016/j.enpol.2015.06.010

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