The Effects on New Zealand Households of an Increase in the Petrol Excise Tax (WP 04/01)

Abstract

This paper reports estimates of the potential welfare effects of hypothetical increases in the petrol excise tax in New Zealand. Equivalent variations, for a range of household types and total expenditure levels, are obtained along with distributional measures.  Household demand responses are modelled using the Linear Expenditure System, where parameters vary by total expenditure level and household type. The effects on inequality were founds to be negligible, but the marginal excess burdens typically ranged between 35 and 55 cents per dollar of additional revenue.