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Encouraging Environmentally Friendlier Cars via Fiscal Measures: General Methodology and Application to Belgium

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  • Laurence Turcksin

    ()
    (Department of MOSI-Transport and Logistics, Faculty of Economics, Social and Political Sciences, Vrije Universiteit Brussel, Pleinlaan 2, 1050 Brussels, Belgium)

  • Olivier Mairesse

    ()
    (Department of MOSI-Transport and Logistics, Faculty of Economics, Social and Political Sciences, Vrije Universiteit Brussel, Pleinlaan 2, 1050 Brussels, Belgium)

  • Cathy Macharis

    ()
    (Department of MOSI-Transport and Logistics, Faculty of Economics, Social and Political Sciences, Vrije Universiteit Brussel, Pleinlaan 2, 1050 Brussels, Belgium)

  • Joeri Van Mierlo

    ()
    (Department of MOSI-Transport and Logistics, Faculty of Economics, Social and Political Sciences, Vrije Universiteit Brussel, Pleinlaan 2, 1050 Brussels, Belgium)

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    Abstract

    In this paper, a Belgian tax reform plan is elaborated to respond to the EU proposal that requires member states to restructure passenger car taxation systems, preferentially based on the CO 2 emissions of the car. A tax orientation on CO 2 emissions alone might however favour diesel vehicles, characterised by a higher fuel efficiency, whereas they release more polluting emissions (PM and NO x) than comparable gasoline vehicles. This paper introduces a methodology, the Ecoscore, as a potential tax assessment basis. The Ecoscore is based on a well-to-wheel framework and enables a comparison of the environmental burden caused by vehicles with different drive trains and using different fuels. A new proposal for a fixed vehicle taxation system, based on the Ecoscore, is launched. In addition, its impact on the life cycle cost of conventional as well as alternative fuelled cars is measured in order to examine its steering effect towards a cleaner vehicle choice. The overall result is that current tax distortions can be corrected by restructuring the vehicle registration tax and annual circulation tax, based on the Ecoscore. To stimulate behavioural changes, such a fiscal policy should however be paired with additional policies that act on the other important aspects that determine the car purchase decision.

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    Bibliographic Info

    Article provided by MDPI, Open Access Journal in its journal Energies.

    Volume (Year): 6 (2013)
    Issue (Month): 1 (January)
    Pages: 471-491

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    Handle: RePEc:gam:jeners:v:6:y:2013:i:1:p:471-491:d:22921

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    Related research

    Keywords: annual circulation tax; Ecoscore; life cycle cost analysis; tax reform; vehicle registration tax;

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    1. DE BORGER, Bruno, . "Discrete choice models and optimal two-part tariffs in the presence of externalities: Optimal taxation of cars," Working Papers 2000021, University of Antwerp, Faculty of Applied Economics.
    2. Inge Mayeres & Stef Proost, 2000. "Should Diesel Cars in Europe be discouraged ?," Center for Economic Studies - Discussion papers ces0018, Katholieke Universiteit Leuven, Centrum voor Economische Studiën.
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    7. Greene, David L. & Patterson, Philip D. & Singh, Margaret & Li, Jia, 2005. "Feebates, rebates and gas-guzzler taxes: a study of incentives for increased fuel economy," Energy Policy, Elsevier, vol. 33(6), pages 757-775, April.
    8. Liebermann, Yehoshua & Ungar, Meyer, 2002. "Efficiency of consumer intertemporal choice under life cycle cost conditions," Journal of Economic Psychology, Elsevier, vol. 23(6), pages 729-748, December.
    9. Turrentine, Thomas S. & Kurani, Kenneth S., 2007. "Car buyers and fuel economy?," Energy Policy, Elsevier, vol. 35(2), pages 1213-1223, February.
    10. de Haan, Peter & Mueller, Michel G. & Scholz, Roland W., 2009. "How much do incentives affect car purchase? Agent-based microsimulation of consumer choice of new cars--Part II: Forecasting effects of feebates based on energy-efficiency," Energy Policy, Elsevier, vol. 37(3), pages 1083-1094, March.
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