The redistributive effects of special taxes
José M. Labeaga, UNED
The general view obtained from the effects of excise duties in Spain (and in Europe) is that they are regressive and their capacity to redistribute income is not clear. The use of these duties has not progressed beyond that of a permanent source of revenue for governments, taking advantage of the limited response of consumers to price changes. Under these circumstances, the question arises of whether it is possible to provide more focus on alternative collection functions and thereby simultaneously contribute to income redistribution. Several possible reforms of these taxes are assessed that can lead to a positive response, especially when it comes to excise duties on electricity and fuels.
1Various goods in all countries of the European Union (EU) are levied with an additional charge to that of VAT in the form of excise duties, which are justified by a regulatory norm because of the existence of negative externalities not included in prices.
2The goods subject to these duties are alcoholic beverages, tobacco, hydrocarbons and other energy products.
3Excise duties are regulated by Law 38/1992, of December 28, 1992, “because the consumption of goods that are subject to these duties generates social costs that are not taken into account when setting their private prices […]”.
4The study has revealed the regressive nature of excise taxes and their use solely to generate revenue for public administrations.
5The maximum average rate of excise duties for the period 2006-2017 was paid by the poorest households in 2010 and was equivalent to 8.45% of their income. The richest households in 2010 paid 2.73%, in other words, 3.1 times less in relative terms than the poorest households.
6The reforms of excise duties on fuels and electricity that have been considered have helped to demonstrate that they can be used to fulfil not only a dissuasive but also a redistributive function.
José M. Labeaga , UNED