Regional evaluation of a tax on the retail sales of certain fuels through a social accounting matrix

Abstract

The goal of this article is to calculate the cumulative impact of the tax on the retail sales of certain fuels (IVMH, in Spanish initials) and its effects on some fundamental economic variables, on the price indices and on remaining tax collections. The novel aspect of this work is to use as methodology a very simple price model applied to a regional Social Accounting Matrix (SAM)–instead of a input-output table–done for Andalusia where we introduce a new tax. The main results of this article show that the introduction of the IVMH in the regional economy may be provoke marginal variations on economy prices. There is also a global increase of tax collections of 0.057%.

Acknowledgements

This work has benefited from the suggestions made by participants in the Workshop on Fiscal Federalism, organized by the centrA Foundation (Seville, March 2004). The authors are grateful for financing received from centrA. The second author thanks the financing of the projects SEC2000-0390, SEC2003-5112/ECO and XT2002-37.

Notes

¹ There are 25 productive sectors (Accounts 1 to 25), two productive factors Capital and Labour (Accounts 26 and 27), the account of savings/investment (Account 29), the institutional sectors: Public Administration (Account 36), a representative consumer (Account 28) and the various taxes: the indirect taxes (Employer's Social Security Payments, Net Production tax, Tariffs and VAT) and the direct taxes (Income tax and Employee's Social Security Payments) and finally, the Foreign sector (Account 37).

² We have to homogenize the collection figures of the IVMH and the Fuel Tax as IVMH collection data is from 2002 (the only available data), while the Fuel tax collection data is from 2001 (last available data). Accordingly, we calculate that IVMH collection data for 2001 is 89034469.2 euros (92595848/1.04). With this data, we obtain tax collection data for both taxes for 1995. For IVMH it is 77421277 euros (89034469/1.15) and for Fuel tax it is 1351.024 million euros (1553.678/1.15). Finally, the IVMH collection percentage of the Fuel tax is 5.73% (77421277/1351.024.35×100).