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A choice experiment on fuel taxation and earmarking in Norway

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  • Sclen, Håkon
  • Kallbekken, Steffen

Abstract

Pigouvian taxes are efficient -- but unpopular among voters -- and hence often politically infeasible. Earmarking of revenues has been widely reported to increase public support for taxes, but earmarking is generally not the most efficient use of the revenues. This trade-off between efficiency and political feasibility is the motivation for our primary research objective: to quantify the effect of earmarking on support for fuel tax rises. Our secondary research objective is to investigate why earmarking increases support. Using data from a representative sample of the Norwegian voter population (NÂ =Â 1147), we estimate models of voter preferences for fuel taxes using logistic regression models. Our results show that, in the absence of earmarking, the majority of voters would like to reduce fuel taxes, but earmarking the revenues for environmental measures has a substantial effect on voter support for fuel tax increases, garnering a majority for increases of up to 15% above present levels. Further analysis indicates that a prime reason why earmarking for environmental measures is popular is that it increases the perceived environmental effectiveness of the tax, and hence its legitimacy as an environmental rather than a fiscal policy instrument.

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Bibliographic Info

Article provided by Elsevier in its journal Ecological Economics.

Volume (Year): 70 (2011)
Issue (Month): 11 (September)
Pages: 2181-2190

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Handle: RePEc:eee:ecolec:v:70:y:2011:i:11:p:2181-2190

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Web page: http://www.elsevier.com/locate/ecolecon

Related research

Keywords: Choice experiment Earmarking Fuel tax Pigouvian tax Tax aversion;

References

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Citations

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Cited by:
  1. Roeder, Kerstin & Habla, Wolfgang, 2012. "The Political Sustainability of Germany’s Environmental Tax Rate," Munich Reprints in Economics 19746, University of Munich, Department of Economics.
  2. Anderson, Blake & M'Gonigle, Michael, 2012. "Does ecological economics have a future?," Ecological Economics, Elsevier, vol. 84(C), pages 37-48.
  3. Kallbekken, Steffen & Garcia, Jorge H. & Korneliussen, Kristine, 2013. "Determinants of public support for transport taxes," Transportation Research Part A: Policy and Practice, Elsevier, vol. 58(C), pages 67-78.
  4. Kallbekken, Steffen & Sælen, Håkon, 2011. "Public acceptance for environmental taxes: Self-interest, environmental and distributional concerns," Energy Policy, Elsevier, vol. 39(5), pages 2966-2973, May.
  5. Runnemark, Emma & Hedman, Jonas & Xiao, Xiao, 2014. "Do Consumers Pay More Using Debit Cards than Cash? An Experiment," Working Papers 2014:21, Lund University, Department of Economics.
  6. Fochmann, Martin & Kroll, Eike B., 2014. "The effects of rewards on tax compliance decisions," arqus Discussion Papers in Quantitative Tax Research 163, arqus - Arbeitskreis Quantitative Steuerlehre.

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