Are Excise Taxes on Beverages Fully Passed Through to Prices? The Danish Evidence

U. Michael Bergman and Niels Lynggård Hansen

FinanzArchiv: Public Finance Analysis, 2019, vol. 75, issue 4, 323-356

Abstract: This paper studies tax shifting of excise taxes on alcoholic and nonalcoholic beverages in Denmark. We use a unique data set collected by Statistics Denmark focusing on six episodes of tax changes: three tax cuts and three tax hikes. We find that excise taxes on beer and soda are overshifted but those on liquor are undershifted. We also find that the pass-through is inversely related to the size of the tax change and that there are asymmetric effects of tax changes on soda. Finally, the tax pass-through on beer and soda is an increasing function of the distance to the German border.

Keywords: tax incidence; excise tax; alcoholic beverages; nonalcoholic beverages (search for similar items in EconPapers)
JEL-codes: D40 H22 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (13)

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DOI: 10.1628/fa-2019-0010

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