The Impact of the Tax Reduction on Fuel Prices in Germany – A Synthetic Difference-in-Differences Approach
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Lea Bernhardt
Abstract
We analyse the impact of the temporary tax reduction on diesel and gasoline prices from June to the end of August 2022 in Germany. By implementing a synthetic difference-in-differences approach with different baskets of European countries, we find a significant reduction in prices by 33.8–34.4 cents per litre for gasoline and 12.2–14.6 cents per litre for diesel. These results are robust to variations of countries as well as different time periods analysed. Therefore, we conclude that the temporary reduction of the tax rate on gasoline and diesel was passed through to consumers by rates of 97 %–99 % for gasoline and 75 %–86 % for diesel, respectively. However, these pass-on rates do not imply a high level of competition. On the contrary, an increase in prices before the introduction of the tax cut and an increase before the end of the discount tend to indicate less intense competition.
Appendix
All countries – weights.
| Country | Super | Diesel |
|---|---|---|
| Austria | 0.203 | 0.136 |
| Belgium | 0.000 | 0.000 |
| Bulgaria | 0.000 | 0.000 |
| Croatia | 0.000 | 0.000 |
| Cyprus | 0.000 | 0.000 |
| Czechia | 0.159 | 0.153 |
| Denmark | 0.042 | 0.028 |
| Estonia | 0.059 | 0.091 |
| Finland | 0.134 | 0.159 |
| France | 0.000 | 0.013 |
| Greece | 0.042 | 0.000 |
| Hungary | 0.000 | 0.000 |
| Ireland | 0.000 | 0.000 |
| Italy | 0.000 | 0.000 |
| Latvia | 0.097 | 0.029 |
| Lithuania | 0.040 | 0.076 |
| Luxembourg | 0.000 | 0.000 |
| Netherlands | 0.042 | 0.122 |
| Poland | 0.000 | 0.000 |
| Portugal | 0.000 | 0.000 |
| Romania | 0.049 | 0.000 |
| Slovakia | 0.000 | 0.000 |
| Slovenia | 0.000 | 0.000 |
| Spain | 0.048 | 0.013 |
| Sweden | 0.084 | 0.179 |
Euro countries – weights.
| Country | Super | Diesel |
|---|---|---|
| Austria | 0.234 | 0.193 |
| Belgium | 0.000 | 0.000 |
| Cyprus | 0.000 | 0.000 |
| Estonia | 0.095 | 0.108 |
| Finland | 0.181 | 0.227 |
| France | 0.012 | 0.019 |
| Greece | 0.078 | 0.000 |
| Ireland | 0.000 | 0.000 |
| Italy | 0.000 | 0.000 |
| Latvia | 0.130 | 0.036 |
| Lithuania | 0.078 | 0.138 |
| Luxembourg | 0.023 | 0.053 |
| Netherlands | 0.081 | 0.195 |
| Portugal | 0.000 | 0.000 |
| Slovakia | 0.000 | 0.000 |
| Slovenia | 0.000 | 0.000 |
| Spain | 0.089 | 0.030 |
Unregulated countries – weights.
| Country | Super | Diesel |
|---|---|---|
| Bulgaria | 0.000 | 0.000 |
| Croatia | 0.000 | 0.000 |
| Cyprus | 0.000 | 0.000 |
| Denmark | 0.053 | 0.125 |
| Estonia | 0.125 | 0.161 |
| Finland | 0.224 | 0.289 |
| Greece | 0.065 | 0.021 |
| Latvia | 0.176 | 0.055 |
| Lithuania | 0.113 | 0.210 |
| Luxembourg | 0.013 | 0.087 |
| Poland | 0.000 | 0.000 |
| Romania | 0.130 | 0.000 |
| Slovakia | 0.000 | 0.000 |
| Spain | 0.103 | 0.053 |
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Articles in the same Issue
- Frontmatter
- Research Articles
- Non-Linear Impact of Public Debt on Inflation in Rwanda
- Does Innovation Shape the Employment Growth Distribution? Evidence from East European Firms
- Land Titling and Sustainable Agricultural Practices in Vietnam
- The Impact of the Tax Reduction on Fuel Prices in Germany – A Synthetic Difference-in-Differences Approach
- How Does Takeover Competition Affect the Stock Performance of Targets and Acquirers? Evidence from the European Union
Articles in the same Issue
- Frontmatter
- Research Articles
- Non-Linear Impact of Public Debt on Inflation in Rwanda
- Does Innovation Shape the Employment Growth Distribution? Evidence from East European Firms
- Land Titling and Sustainable Agricultural Practices in Vietnam
- The Impact of the Tax Reduction on Fuel Prices in Germany – A Synthetic Difference-in-Differences Approach
- How Does Takeover Competition Affect the Stock Performance of Targets and Acquirers? Evidence from the European Union
