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Facing a fiscal crisis, the Islamic Republic of Iran decided to increase gasoline prices at the end of 2019. This paper estimates the impact of the price increase on household welfare and government revenue, using the most recent Household Expenditure and Income Survey conducted by the Statistical Center of Iran in March 2018-March 2019. The paper looks at the direct and indirect impacts of the reform and quantifies the compensatory cash transfer program the government instituted. Despite very regressive gasoline subsidies benefitting the rich the most, the increase in gasoline prices is found to affect the poor to a greater extent due to larger negative indirect impacts as well as their relatively low incomes. In total, poverty is estimated to increase by about 2.9 percentage points, with the direct impact accounting for a third of this increase. The proposed government scheme, if targeted perfectly to the poorest 18 million households, would fully compensate the poorest bottom 50 percent of the population and reduce poverty to below pre-reform levels. The annual cost of the program will be around 338 trillion rials, which accounts for 77 percent of the estimated total savings from the subsidies reform (439 trillion rials).
Cash Transfers --- Energy Demand --- Energy Policies and Economics --- Fiscal Impact --- Fiscal Trends --- Gasoline Price --- Income Elasticity --- Inequality --- Oil and Gas --- Oil Prices --- Poverty --- Services and Transfers to Poor --- Subsidies --- Taxation and Subsidies
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This paper assesses whether the level of taxation of motor fuel is broadly appropriate in a group of countries (OECD, BRICs and South Africa) accounting for more than 80 percent of world greenhouse gas emissions. The analysis deals with emissions from oil combustion in transport, which account for about 40 percent of carbon dioxide emissions. In the benchmark specification, six countries (responsible, in turn, for more than 40 percent of worldwide motor-fuel greenhouse gas world emissions) would be undertaxing motor fuel. The authors evaluate the sensitivity of the results to the values of the elasticities and externalities that used in the analysis. They find that varying the values of these parameters (within the level of uncertainty reasonably associated with them) significantly affects the results. This implies that, while informative, the results must be taken as indicative. Further analysis for a particular country must rely on a well-informed choice for the values of the country-specific parameters.
Carbon dioxide --- Carbon dioxide emissions --- Climate change --- Climate Change Economics --- Climate Change Mitigation and Green House Gases --- Costs --- Elasticities --- Energy --- Energy Production and Transportation --- Environment --- Environmental taxes --- Excise tax --- Externalities --- Fuel taxation --- Gasoline --- Gasoline price --- Gasoline prices --- Gasoline taxation --- Greenhouse gas --- Greenhouse gas emissions --- Macroeconomics and Economic Growth --- Motor fuel --- Subsidies --- Tax --- Taxation & Subsidies --- Taxes --- Transport --- Transport Economics Policy & Planning
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