Tax Pass-through in the European Beer Market

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 sp...

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Bibliographic Details
Published in:MAGKS - Joint Discussion Paper Series in Economics (Band 47-2017)
Main Authors: Ardalan, Aria, Kessing, Sebastian G.
Format: Article
Language:English
Published: Philipps-Universität Marburg 2017
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Online Access:PDF Full Text
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Summary: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, respectively. Ad valorem taxes are 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. Nevertheless, the difference between ad valorem and specific tax pass-through rates indicates that imperfect competition plays an important role in the European beer market.
Physical Description:24 Pages
ISSN:1867-3678
DOI:10.17192/es2024.0512