Aggregate effects of reducing the motor fuels excise tax in the United States

Journal Article · Tue Dec 31 04:00:00 EST 1996 · Journal of Energy and Development

OSTI ID:577111

Uri, N D; Boyd, R

This paper assesses the effects of the proposed reduction in the excise tax on gasoline and diesel fuel on the US economy. The analytical approach used consists of a computable general equilibrium model composed of 14 producing sectors, 14 consuming sectors, 6 household categories classified by income, and a government. The effects of a 4.3 cents per gallon reduction in the excise tax on gasoline and diesel fuel on prices and quantities are examined. The results suggests, for example, a decrease in the tax would result in higher output by the producing sectors (by about $2.86 billion), an expansion in the consumption of goods and services (by about $3.48 billion), and an increase in welfare (by about $3.59 billion). The government would realize a decrease in revenue of about $2.37 billion. When subjected to a sensitivity analysis, the results are reasonably robust with regard to the assumption of the values of the substitution elasticities.

• OSTI ID: 577111
• Journal Information: Journal of Energy and Development, Journal Name: Journal of Energy and Development Journal Issue: 1 Vol. 22; ISSN 0361-4476; ISSN JENDD2
• Country of Publication: United States
• Language: English

Related Subjects

29 ENERGY PLANNING, POLICY, AND ECONOMY
CONSUMPTION RATES
DIESEL FUELS
ECONOMIC IMPACT
GASOLINE
PRODUCTION
TAXES