Winners and Losers from an Announced Durable Tax Hike

Tesla in Denmark

Research output: Contribution to journalJournal articleResearchpeer-review

Abstract

We study the consumer response and tax revenue implications of the early announcement of a durable good tax. In 2015, the Danish government announced a tax hike on electric vehicles several months before its implementation. There was a dramatic surge in sales of Tesla Model S vehicles just before the tax came into effect, and a dramatic ebb in the months following. We find that the government lost 169 million DKK (23 million Euro) in tax revenue on luxury vehicles by announcing the tax change before its implementation. We further find that speculation played at most a limited role in the Tesla sales surge. In total, final consumers of Teslas gained from the roll-out of the law change by avoiding the new tax.
Original languageEnglish
JournalApplied Economics
Volume51
Issue number7
Pages (from-to)722-730
Number of pages9
ISSN0003-6846
DOIs
Publication statusPublished - 2019

Keywords

  • Tax announcements
  • Durable goods
  • Electric vehicles
  • Tesla
  • Denmark

Cite this

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abstract = "We study the consumer response and tax revenue implications of the early announcement of a durable good tax. In 2015, the Danish government announced a tax hike on electric vehicles several months before its implementation. There was a dramatic surge in sales of Tesla Model S vehicles just before the tax came into effect, and a dramatic ebb in the months following. We find that the government lost 169 million DKK (23 million Euro) in tax revenue on luxury vehicles by announcing the tax change before its implementation. We further find that speculation played at most a limited role in the Tesla sales surge. In total, final consumers of Teslas gained from the roll-out of the law change by avoiding the new tax.",
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Winners and Losers from an Announced Durable Tax Hike : Tesla in Denmark. / Asplund, Marcus; Jinkins, David; Lutz, Chandler; Paizs, Gyorgy.

In: Applied Economics, Vol. 51, No. 7, 2019, p. 722-730.

Research output: Contribution to journalJournal articleResearchpeer-review

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