Tax Holidays and the Heterogeneous Pass-Through of Gasoline Taxes

Tsvetan Tsvetanov
Authors registered in the RePEc Author Service: William Barnett

No 202219, WORKING PAPERS SERIES IN THEORETICAL AND APPLIED ECONOMICS from University of Kansas, Department of Economics

Abstract: The pass-through of gasoline taxes to retail prices plays a vital role in determining whether a fuel tax suspension policy is effective at providing financial relief to consumers. Given the increased interest in utilizing such "tax holidays" to mitigate the rise of gasoline prices, it is important to obtain updated and precise location-specific pass-through estimates that will inform the ongoing policy efforts. Using daily city-level data from a sample of 108 cities in 15 East Coast states and the District of Columbia during the period February 1, 2022-June 30, 2022, I estimate an average pass-through rate of gasoline taxes of 79%. My subsequent analysis reveals considerable heterogeneity across locations, with less than full pass-through in most "tax holiday" states. Consistent with the prior literature, I find evidence that gasoline content regulations, refinery capacity constraints, and wholesale storage constraints may have contributed to this heterogeneity.

Keywords: gasoline prices; gasoline tax; tax incidence; tax holiday (search for similar items in EconPapers)
JEL-codes: H22 H71 Q41 Q48 (search for similar items in EconPapers)
Date: 2022-12
New Economics Papers: this item is included in nep-acc, nep-ban, nep-cna and nep-mon
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Journal Article: Tax holidays and the heterogeneous pass-through of gasoline taxes (2024)
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