Tax pass-through in the European beer market

Aria Ardalan and Sebastian Kessing

No 7626, CESifo Working Paper Series from CESifo

Abstract: We study the pass-through of indirect taxes on beer prices in the European Union (EU). Exploiting the variation of value added tax rates, beer excise tax rates, and beer prices in a panel of monthly data from 1996 to 2016 of all current 28 EU member states, we estimate the tax pass-through of specific beer excise taxes and ad valorem value added taxes (VAT). VAT is under-shifted at a rate of approximately 70%. Specific excise taxes are almost fully shifted to prices in the EU, but, in contrast to the empirical findings for the US, there is no evidence of over-shifting. The difference between the two tax pass-through rates points towards the importance of imperfect competition in the European beer market. Excise tax increases are passed through faster and at a higher rate than excise tax decreases.

Keywords: tax incidence; pass-through; VAT; excise taxes; EU; beer (search for similar items in EconPapers)
JEL-codes: H22 H23 (search for similar items in EconPapers)
Date: 2019
New Economics Papers: this item is included in nep-eur, nep-pbe and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Tax pass-through in the European beer market (2021)
Working Paper: Tax Pass-Through in the European Beer Market (2019)
Working Paper: Tax Pass-through in the European Beer Market (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_7626

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