Impact of the Tax on the Price of Gasoline on the Distribution of the Consumption Budget in Mexican Families

Abstract

This research analyzes the impact of tax over gasoline on household consumption budget in Mexico. We estimate an Almost Ideal Demand System (AIDS) econometric model including demographic and socioeconomic variables using data at the household level from the National Survey of Income and Expenditure (ENIGH, 2006). The analysis shows a differentiated effect of the gasoline consumption tax over families with different income levels and a redistribution of the expenditure to goods that are substitutes of automobiles, showing possible redistributive effects of this type of environmental policies that are aimed to reduce the consumption of polluting goods.