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Simultaneous optimization of multiple taxes on car use and tolls considering the marginal cost of public funds in Japan

Author

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  • Tatsuhito Kono

    (Tohoku University)

  • Yohei Mitsuhiro

    (Tohoku University)

  • Jun Yoshida

    (Kyushu University)

Abstract

We simultaneously optimize multiple tax instruments (fuel tax, car-ownership tax, and tolls) when these instruments are used as public funds with distortionary labor tax, accounting for pollution, congestion, accident externalities, and fiscal constraints of the tax-related agency and the toll-collecting agency. We quantitatively optimize taxes and tolls using parameters for Japan under three scenarios: (1) imposition of peak and off-peak tolls at different rates and simultaneous optimization of all tax instruments; (2) optimization of only car-related taxes without consolidation of the toll-collecting agency’s fiscal constraints; (3) optimization of only fuel tax. We find that peak toll and fuel tax should be higher, and off-peak toll and car-ownership tax should be lower than the current rate under Scenario 1. Scenarios 1 can improve welfare by 1000 to 2400 dollars/car, and Scenarios 2 and 3 can achieve more than 90% and 20–60% of the welfare gain in Scenario 1, respectively.

Suggested Citation

  • Tatsuhito Kono & Yohei Mitsuhiro & Jun Yoshida, 2021. "Simultaneous optimization of multiple taxes on car use and tolls considering the marginal cost of public funds in Japan," The Japanese Economic Review, Springer, vol. 72(2), pages 261-297, April.
    • Handle: RePEc:spr:jecrev:v:72:y:2021:i:2:d:10.1007_s42973-019-00029-4
    DOI: 10.1007/s42973-019-00029-4
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    Cited by:

    1. Domon, Shohei & Hirota, Mayu & Kono, Tatsuhito & Managi, Shunsuke & Matsuki, Yusuke, 2020. "Congestion Tolls Efficiently Reduce CO2 Emissions from Homes in addition to Urban Transportation in the Long Run," MPRA Paper 102220, University Library of Munich, Germany.
    2. Doi, Naoshi & Kono, Tatsuhito & Suzaki, Izumo, 2023. "Optimizing Multiple Airport Charges with Endogenous Airline Quality Considering the Marginal Cost of Public Funds," MPRA Paper 116176, University Library of Munich, Germany.
    3. Yoshida, Jun & Kono, Tatsuhito, 2020. "Optimal Car-related Taxes and Pricing in Beijing Considering the Marginal Cost of Public Funds," MPRA Paper 101728, University Library of Munich, Germany.
    4. Joto, Keigo & Konagane, Joji & Kono, Tatsuhito & Kuwahara, Masao, 2020. "Optimal Location-dependent Pricing Policies on Railways and Roads in a Continuous City," MPRA Paper 100446, University Library of Munich, Germany.
    5. Domon, Shohei & Hirota, Mayu & Kono, Tatsuhito & Managi, Shunsuke & Matsuki, Yusuke, 2022. "The long-run effects of congestion tolls, carbon tax, and land use regulations on urban CO2 emissions," Regional Science and Urban Economics, Elsevier, vol. 92(C).
    6. Shilpa Dogra & Nicholas O’Rourke & Michael Jenkins & Daniel Hoornweg, 2021. "Integrated Urban Mobility for Our Health and the Climate: Recommended Approaches from an Interdisciplinary Consortium," Sustainability, MDPI, vol. 13(22), pages 1-12, November.
    7. Börjesson, Maria & Asplund, Disa & Hamilton, Carl, 2023. "Optimal kilometre tax for electric vehicles," Transport Policy, Elsevier, vol. 134(C), pages 52-64.

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    More about this item

    Keywords

    Optimal taxation; Marginal cost of public funds; Toll; Fuel tax; Car-ownership tax; Externality;
    All these keywords.

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy

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