Based On The Blp Model Of China's Automobile Consumption Tax And Fuel Tax Progressivity Analysis

This paper uses Suits index and Lorenz curve proposed by Suits (1977) to explore the progressivity of consumption and fuel tax in the Chinese auto industry. For the first time, we compared the progressivity of the two taxes. Since it is difficult to obtain data of individual tax payment, we use the framework of Berry, Levinson, and Pakes (1995) and simulation method to combine micro data about the household income and driving pattern and macro data of aggregate sales to estimate the households’actual tax burden. Our empirical findings suggest that both consumption tax and fuel tax are regressive. However, consumption tax based on the size of displacement is less regressive than fuel tax for the lower income group but the effect is the opposite for the higher income group. Generally speaking, in terms of fairness, consumption tax is more preferable than fuel tax.