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Commuting, transport tax reform and the labour market: Employer-paid parking and the relative efficiency of revenue recycling instruments

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  • DE BORGER, Bruno
  • WUYTS, Bart

Abstract

In this paper we study the welfare effects of a budgetary neutral increase in taxes on car commuters in a model that takes into account the presence of employer-paid parking at the workplace. Results include the following. First, we find that the presence of employer-paid parking substantially increases the welfare effect of such a tax reform, independent of the use of the revenues. The intuition is that congestion taxes not only correct congestion externalities, they also reduce the inefficiency caused by employer-paid parking. Second, different congestion effects of alternative recycling instruments and the presence of employer-paid parking jointly imply that recycling the tax revenues via higher public transport subsidies may yield much more favourable welfare effects than previously believed. It can easily outperform recycling the tax revenues via lower labour taxes. Third, cashing out parking costs to public transport users is found to generate substantial positive welfare effects. The theoretical predictions are illustrated using a numerical model calibrated on Belgian data.

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Bibliographic Info

Paper provided by University of Antwerp, Faculty of Applied Economics in its series Working Papers with number 2007020.

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Length: 31 pages
Date of creation: Oct 2007
Date of revision:
Handle: RePEc:ant:wpaper:2007020

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Postal: Prinsstraat 13, B-2000 Antwerpen
Web page: https://www.uantwerp.be/en/faculties/applied-economic-sciences/
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  1. Verhoef Erik T., 1997. "Externalities," Serie Research Memoranda, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics 0031, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
  2. Shoup, Donald C., 1997. "Evaluating the effects of cashing out employer-paid parking: Eight case studies," Transport Policy, Elsevier, vol. 4(4), pages 201-216, October.
  3. Bruno De Borger & Kurt Van Dender, 2002. "Transport tax reform, commuting and endogenous values of time," Energy, Transport and Environment Working Papers Series, Katholieke Universiteit Leuven, Centrum voor Economische Studiën, Energy, Transport and Environment ete0207, Katholieke Universiteit Leuven, Centrum voor Economische Studiën, Energy, Transport and Environment.
  4. de Bovenberg, A Lans & Mooij, Ruud A, 1994. "Environmental Levies and Distortionary Taxation," American Economic Review, American Economic Association, American Economic Association, vol. 84(4), pages 1085-89, September.
  5. Edward Calthrop & Stef Proost & Kurt van Dender, 2000. "Parking Policies and Road Pricing," Urban Studies, Urban Studies Journal Limited, Urban Studies Journal Limited, vol. 37(1), pages 63-76, January.
  6. Parry Ian W. H., 1995. "Pollution Taxes and Revenue Recycling," Journal of Environmental Economics and Management, Elsevier, vol. 29(3), pages S64-S77, November.
  7. repec:ucp:bkecon:9781884829987 is not listed on IDEAS
  8. Parry, Ian W H & Bento, Antonio, 2001. " Revenue Recycling and the Welfare Effects of Road Pricing," Scandinavian Journal of Economics, Wiley Blackwell, Wiley Blackwell, vol. 103(4), pages 645-71, December.
  9. Lawrence H. Goulder & Ian W. H. Parry & Roberton C. Williams III & Dallas Burtraw, 1998. "The Cost-Effectiveness of Alternative Instruments for Environmental Protection in a Second-Best Setting," NBER Working Papers 6464, National Bureau of Economic Research, Inc.
  10. Gerard de Jong & Hugh Gunn, 2001. "Recent Evidence on Car Cost and Time Elasticities of Travel Demand in Europe," Journal of Transport Economics and Policy, London School of Economics and University of Bath, London School of Economics and University of Bath, vol. 35(2), pages 137-160, May.
  11. Kurt Van Dender, 2003. "Transport Taxes with Multiple Trip Purposes," Scandinavian Journal of Economics, Wiley Blackwell, Wiley Blackwell, vol. 105(2), pages 295-310, 06.
  12. Richard Arnott, 1990. "A Temporal and Spatial Equilibrium Analysis of Commuter Parking," Discussion Papers, Northwestern University, Center for Mathematical Studies in Economics and Management Science 884, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  13. Anderson, Simon P. & de Palma, Andre, 2004. "The economics of pricing parking," Journal of Urban Economics, Elsevier, vol. 55(1), pages 1-20, January.
  14. Arnott, Richard & de Palma, Andre & Lindsey, Robin, 1993. "A Structural Model of Peak-Period Congestion: A Traffic Bottleneck with Elastic Demand," American Economic Review, American Economic Association, American Economic Association, vol. 83(1), pages 161-79, March.
  15. Goulder Lawrence H., 1995. "Effects of Carbon Taxes in an Economy with Prior Tax Distortions: An Intertemporal General Equilibrium Analysis," Journal of Environmental Economics and Management, Elsevier, vol. 29(3), pages 271-297, November.
  16. Shoup, Donald C., 1997. "Evaluating the effects of cashing out employer-paid parking: Eight case studies," University of California Transportation Center, Working Papers qt2qw4w2s1, University of California Transportation Center.
  17. Victor R. Fuchs & Alan B. Krueger & James M. Poterba, 1998. "Economists' Views about Parameters, Values, and Policies: Survey Results in Labor and Public Economics," Journal of Economic Literature, American Economic Association, American Economic Association, vol. 36(3), pages 1387-1425, September.
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  19. Shoup, Donald C., 1993. "Cashing Out Employer-Paid Parking: A Precedent for Congestion Pricing?," University of California Transportation Center, Working Papers qt8xr2v0j1, University of California Transportation Center.
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Cited by:
  1. van Ommeren, Jos & Wentink, Derk & Dekkers, Jasper, 2011. "The real price of parking policy," Journal of Urban Economics, Elsevier, vol. 70(1), pages 25-31, July.
  2. Hirte, Georg & Tscharaktschiew, Stefan, 2011. "Income tax deduction of commuting expenses and tax funding in an urban CGE study: the case of German cities," Dresden Discussion Paper Series in Economics, Dresden University of Technology, Faculty of Business and Economics, Department of Economics 02/11, Dresden University of Technology, Faculty of Business and Economics, Department of Economics.

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