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Not fully charged: Welfare effects of tax incentives for employer-provided electric cars

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  • Dimitropoulos, Alexandros
  • van Ommeren, Jos N.
  • Koster, Paul
  • Rietveld, Piet

Abstract

More than 15 million cars are provided as fringe benefits by employers in Europe. The company car market is the driving force of changes in European car fleets and one of the main channels for the penetration of low emission vehicles. Policies in support of low emission vehicles through this channel have been popular. This paper introduces an approach to estimate the welfare effects of policies linking company car tax base rates with vehicles׳ environmental impact. The approach is applied to evaluate the effects of tax advantages for electric company cars in the Netherlands. We find that the welfare losses caused by these policies are substantial, and even outweigh the foregone tax revenue. This result also holds if we assume that there are substantial future benefits from the adoption of electric company cars, e.g. in terms of positive network externalities, technological innovation and concomitant environmental benefits.

Suggested Citation

  • Dimitropoulos, Alexandros & van Ommeren, Jos N. & Koster, Paul & Rietveld, Piet, 2016. "Not fully charged: Welfare effects of tax incentives for employer-provided electric cars," Journal of Environmental Economics and Management, Elsevier, vol. 78(C), pages 1-19.
    • Handle: RePEc:eee:jeeman:v:78:y:2016:i:c:p:1-19
    DOI: 10.1016/j.jeem.2016.01.004
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    3. Gavrilescu Ileana, 2018. "Business conjuncturality on the topic of personal mobility using electric automobiles," Proceedings of the International Conference on Business Excellence, Sciendo, vol. 12(1), pages 398-406, May.
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    6. Demeulenaere, Xavier, 2019. "The use of automotive fleets to support the diffusion of Alternative Fuel Vehicles: A Rapid Evidence Assessment of barriers and decision mechanisms," Research in Transportation Economics, Elsevier, vol. 76(C).
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    8. Sergio Luis Náñez Alonso, 2020. "The Tax Incentives in the IVTM and “Eco-Friendly Cars”: The Spanish Case," Sustainability, MDPI, vol. 12(8), pages 1-29, April.
    9. Jeremy van Dijk & Mehdi Farsi, 2022. "Who is afraid of electric vehicles? An analysis of stated EV preferences in Switzerland," IRENE Working Papers 22-04, IRENE Institute of Economic Research.
    10. Rixt Bijker & Eveline van Leeuwen & Paul (P.R.) Koster, 2019. "To join or not to join? The impact of social interactions on local participation decisions," Tinbergen Institute Discussion Papers 19-003/VIII, Tinbergen Institute.
    11. Ma, Shao-Chao & Xu, Jin-Hua & Fan, Ying, 2019. "Willingness to pay and preferences for alternative incentives to EV purchase subsidies: An empirical study in China," Energy Economics, Elsevier, vol. 81(C), pages 197-215.
    12. Loría, Luis Enrique & Watson, Verity & Kiso, Takahiko & Phimister, Euan, 2019. "Investigating users' preferences for Low Emission Buses: Experiences from Europe's largest hydrogen bus fleet," Journal of choice modelling, Elsevier, vol. 32(C), pages 1-1.
    13. Charu Grover & Sangeeta Bansal & Adan L. Martinez-Cruz, "undated". "Influence of Social Network Effect and Incentive on Choice of Star Labeled Cars in India: A Latent Class Approach based on Choice Experiment," Centre for International Trade and Development, Jawaharlal Nehru University, New Delhi Discussion Papers 18-05, Centre for International Trade and Development, Jawaharlal Nehru University, New Delhi, India.
    14. Jeremy Dijk & Nathan Delacrétaz & Bruno Lanz, 2022. "Technology Adoption and Early Network Infrastructure Provision in the Market for Electric Vehicles," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 83(3), pages 631-679, November.

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