The impact of fuel taxation in Sweden : A study on the distributional impact of fuel tax in Sweden: A regional analysis
Abstract: The general opinion is that an increase in fuel taxation would affect the countryside of Sweden to a greater extent, than the inner-city areas of the country. The topic of fuel taxation has become widely discussed on a political level throughout Europe. This paper examines the distributional effects on taxation of fuel in Sweden, by comparing different municipalities from different regions. By using aggregated data from different sources and estimate an increase in fuel prices by 10 percent, this paper estimates the direct effects of an increase in fuel taxation. The results show that by increasing the price on fuel with 10 percent, the municipalities located in the countryside of Sweden have a higher distributional impact and a greater tax burden compared to municipalities located near larger cities. But the differences are modest, and this paper concludes that the fuel tax should be considered proportional throughout all regions of the country.
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