Browsing by Subject "autovero"

Tax incidence is a measure for the burden of taxation on the seller and the buyer. Recently there have been empirical evidence of asymmetries in pass-through that are not consistent with the basic theory of tax incidence. The two $CO_2$ based car registration tax reforms of 2008 and 2012 in Finland allow for contributing to the previous literature by studying potential asymmetries in pass-through because the 2008 reform was mostly a tax cut and the 2012 reform was mostly an tax increase. My data consists of full sample of tax forms for all imported cars between 2001 and 2018 complemented by full registry data for all the cars in use between 2001 and 2018 in Finland. I find almost full pass-through of the taxes by using fixed effects regression and differences-in-differences as two complementary identification strategies with different critical assumptions. There might exist some spillover effects and therefore my preferred strategy is the more simple fixed effects regression with pass-through estimate of 89\% for the tax cut of 2008 and 95\% for the tax increase of 2012. Overall my point estimates for the 2008 reform are smaller than for the 2012 reform but this difference is not highly significant statistically. I contribute to the existing literature by being the first one to estimate the tax incidence of car registration tax reforms in Finland.