The distributional effects of energy taxes (OECD)

A major obstacle to the more widespread use of energy taxation is the concern that energy taxes may be regressive, hitting the poor harder than the rich. Evidence is surprisingly scarce with only a few studies investigating the distributional effects of energy taxes in OECD countries. This OECD paper adds to this evidence by providing a systematic analysis of the distributional effects of the main energy taxes in 21 OECD countries. It shows that the distributional effects of energy taxes differ by energy carrier. On an expenditure basis, taxes on transport fuels are not regressive on average, as households in lower expenditure deciles spend a lower proportion of their expenditure on taxes on transport fuels. Taxes on heating fuels are slightly regressive, i.e., the percentage of expenditure spent on them decreases with expenditure. Taxes on electricity are more regressive than taxes on heating fuels. The paper is available to download on the OECD website.