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The Efficiency Effects of Removing the Diesel Fuel Rebate Scheme

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  • ROBERT ALBON

Abstract

The diesel fuel rebate scheme which returns most of the excise on diesel fuel used off‐road by agricultural and mineral producers has been debated. Removal could cause three inefficiencies (input choice distortion. deadweight losses on reduced exports, and flowon inefficiencies in domestic processing) and two efficiencies (from reducing other taxes and savings on administrative and compliance costs). Empirical studies suggest high net efficiency costs from removal, but while business input taxes have no place in an efficient taxation structure, a small reduction in the rebate could yield some revenue at a low marginal deadweight loss.

Suggested Citation

  • Robert Albon, 1998. "The Efficiency Effects of Removing the Diesel Fuel Rebate Scheme," The Economic Record, The Economic Society of Australia, vol. 74(225), pages 145-152, June.
    • Handle: RePEc:bla:ecorec:v:74:y:1998:i:225:p:145-152
    DOI: 10.1111/j.1475-4932.1998.tb01912.x
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    5. Diamond, Peter A & Mirrlees, James A, 1971. "Optimal Taxation and Public Production II: Tax Rules," American Economic Review, American Economic Association, vol. 61(3), pages 261-278, June.
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