On the Costs of Excise Taxes and Income Taxes in the UK

Author: Parry, I.W.H.

Source: International Tax and Public Finance, Volume 10, Number 3, May 2003 , pp. 281-304(24)

Publisher: Springer

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Abstract:

This paper develops an analytical framework for estimating the marginal excess burden (MEB) of taxes on gasoline, alcohol, tobacco, and labor in the UK, accounting for externalities and interactions among the taxes. Under most scenarios the MEB of the gasoline tax exceeds that for the labor tax, the MEB of the alcohol tax is roughly the same, while the MEB of the tobacco tax is lower than for the labor tax. These preliminary findings suggest that the gasoline tax may be too high, the alcohol tax might be about right, and the tobacco tax might be too low.

Keywords: welfare cost; labor tax; cigarette tax; alcohol tax; petrol tax; externality; marginal excess burden

Document Type: Research article

Affiliations: 1: Resources for the Future, 1616 P Street NW, Washington, DC 20036, USA parry@rff.org

Publication date: 2003-05-01