Are Excise Taxes on Beverages Fully Passed through to Prices? The Danish Evidence

This paper studies tax shifting of excise taxes on alcoholic and nonalcoholic beveragesin Denmark. We use a unique data set collected by Statistics Denmark focusing on sixepisodes of tax changes: three tax cuts and three tax hikes. We find that excise taxeson beer and soda are overshifted but those on liquor are undershifted. We also findthat the pass-through is inversely related to the size of the tax change and that there areasymmetric effects of tax changes on soda. Finally, the tax pass-through on beer and sodais an increasing function of the distance to the German border