Taxation and Pricing of Petroleum Products in Developing Countries: A Framework for Analysis with Application to Nigeria

February 1, 2003

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Format: Chicago

Shahabuddin M Hossain. Taxation and Pricing of Petroleum Products in Developing Countries: A Framework for Analysis with Application to Nigeria, (USA: International Monetary Fund, 2003) accessed December 26, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

Using the modern theory of public economics as the point of departure, this paper outlines a basic principle for setting taxes and/or prices of commodities based on two key criteria, efficiency and equity. The paper shows that for petroleum products, the basic principle needs modification in the presence of various externalities and market imperfections in a setting where the instruments to address the externalities and imperfections are limited. Drawing from theoretical and empirical literature, the paper provides an operational framework and then illustrates how, for a country like Nigeria, the relevant taxes/subsidies to correct the externalities and to address equity and revenue considerations can be measured with a view to setting prices of petroleum products. However, the paper refrains from making any specific suggestion for policy reform in Nigeria. The framework outlined in the paper can be applied to the analysis of petroleum product taxes and prices in other developing countries.

Subject: Commodities, Congestion tax, Expenditure, Fuel prices, Gasoline, Oil prices, Prices, Public expenditure review, Taxes

Keywords: Africa, Asia and Pacific, Border price, Border price rule, Border prices, C.i.f. price, Congestion cost, Congestion tax, Cost data, Depreciation cost, Efficiency, Equity, Europe, Externalities, Fuel prices, Gasoline, Global, Import parity price, Kerosene price subsidy scheme, Oil prices, Petroleum product, Petroleum product prices, Petroleum products, Price, Price stabilization, Product, Public expenditure review, Revenue, Road damage cost, Road damage externality, Road user charge, Road user cost, Stabilization scheme, Subsidies, Taxes, West Africa, WP

Publication Details

Pages:

27
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2003/042
Stock No:

WPIEA0422003
ISBN:

9781451846232
ISSN:

1018-5941

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