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Using the modern theory of public economics as the point of departure, this paper outlines a basic principle for setting taxes and/or prices of commodities based on two key criteria, efficiency and equity. The paper shows that for petroleum products, the basic principle needs modification in the presence of various externalities and market imperfections in a setting where the instruments to address the externalities and imperfections are limited. Drawing from theoretical and empirical literature, the paper provides an operational framework and then illustrates how, for a country like Nigeria, the relevant taxes/subsidies to correct the externalities and to address equity and revenue considerations can be measured with a view to setting prices of petroleum products. However, the paper refrains from making any specific suggestion for policy reform in Nigeria. The framework outlined in the paper can be applied to the analysis of petroleum product taxes and prices in other developing countries.

Investments: Energy --- Macroeconomics --- Public Finance --- Taxation --- Efficiency --- Optimal Taxation --- Taxation and Subsidies: Incidence --- Energy: Demand and Supply --- Prices --- Taxation and Subsidies: Externalities --- Redistributive Effects --- Environmental Taxes and Subsidies --- Energy: General --- National Government Expenditures and Related Policies: General --- Public finance & taxation --- Investment & securities --- Oil prices --- Congestion tax --- Gasoline --- Public expenditure review --- Fuel prices --- Taxes --- Commodities --- Expenditure --- Congestion pricing --- Gas industry --- Expenditures, Public --- Nigeria

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This paper investigates the income distributional implications of different value-added tax (VAT) schemes in Bangladesh. The results indicate that a revenue-neutral uniform VAT is regressive in its impact on the income of different households. This paper explores an alternative policy package, consisting of a basic rate of VAT with exemptions for certain commodity groups, chosen on the basis of their distributional characteristics. The welfare consequences of the alternative package are found to be superior to those of the uniform VAT.

Investments: Commodities --- Public Finance --- Taxation --- Taxation and Subsidies: Incidence --- Taxation and Subsidies: Externalities --- Redistributive Effects --- Environmental Taxes and Subsidies --- Business Taxes and Subsidies --- National Government Expenditures and Related Policies: General --- Agriculture: General --- Commodity Markets --- Public finance & taxation --- Investment & securities --- Excise taxes --- Value-added tax --- Expenditure --- Agricultural commodities --- Commodities --- Excises --- Taxes --- Consumption taxes --- Spendings tax --- Expenditures, Public --- Farm produce --- Commercial products --- Excise tax --- Bangladesh