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Distortionary Company Car Taxation: Deadweight Losses through Increased Car Ownership

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  • Jos N. van Ommeren

    (VU University Amsterdam)

  • Eva Gutierrez-i-Puigarnau

    (VU University Amsterdam)

Abstract

We analyse the effects of distortionary company car taxation through increased household carownership for the Netherlands. We use several identification strategies and demonstrate thatfor about 20 percent of households company car possession increases car ownership. Theannual welfare loss of distortionary company taxation through increased car ownership isgenerally rather small, maximally €120 per company car, and likely much less. However, forpolicies that exempt households from paying tax on their company car, the annual deadweightloss is likely higher.

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Bibliographic Info

Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 11-100/3.

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Date of creation: 21 Jul 2011
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Handle: RePEc:dgr:uvatin:20110100

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Web page: http://www.tinbergen.nl

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Keywords: Fringe benefits; taxation; company car;

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  1. Bento, Antonio M. & Goulder, Lawrence H. & Jacobsen, Mark R. & von Haefen, Roger H., 2007. "Distributional and Efficiency Impacts of Increased U.S. Gasoline Taxes," Working Papers 127021, Cornell University, Department of Applied Economics and Management.
  2. Mohammad Arzaghi & J. Vernon Henderson, 2008. "Networking off Madison Avenue," Review of Economic Studies, Oxford University Press, vol. 75(4), pages 1011-1038.
  3. Dargay, Joyce & Gately, Dermot, 1999. "Income's effect on car and vehicle ownership, worldwide: 1960-2015," Transportation Research Part A: Policy and Practice, Elsevier, vol. 33(2), pages 101-138, February.
  4. Zax, Jeffrey S., 1988. "Fringe benefits, income tax exemptions, and implicit subsides," Journal of Public Economics, Elsevier, vol. 37(2), pages 171-183, November.
  5. Harvey S. Rosen & Kenneth A. Small, 1979. "Applied Welfare Economics with Discrete Choice Models," NBER Working Papers 0319, National Bureau of Economic Research, Inc.
  6. DE BORGER, Bruno & WUYTS, Bart, 2010. "The tax treatment of company cars, commuting and optimal congestion taxes," Working Papers 2010017, University of Antwerp, Faculty of Applied Economics.
  7. Frank Verboven, 1996. "International Price Discrimination in the European Car Market," RAND Journal of Economics, The RAND Corporation, vol. 27(2), pages 240-268, Summer.
  8. M. Kumar & K. V. Krishna Rao, 2006. "A Stated Preference Study for a Car Ownership Model in the Context of Developing Countries," Transportation Planning and Technology, Taylor & Francis Journals, vol. 29(5), pages 409-425, July.
  9. Parry, Ian & Small, Kenneth, 2002. "Does Britain or the United States Have the Right Gasoline Tax?," Discussion Papers dp-02-12-, Resources For the Future.
  10. Palma, André de & Lindsey, Robin & Proost, Stef, 2006. "Research challenges in modelling urban road pricing: An overview," Transport Policy, Elsevier, vol. 13(2), pages 97-105, March.
  11. Jos Van Ommeren & Derk Wentink, 2012. "The (Hidden) Cost Of Employer Parking Policies," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 53(3), pages 965-978, 08.
  12. Eva Gutiérrez‐i‐Puigarnau & Jos N. Van Ommeren, 2011. "Welfare Effects Of Distortionary Fringe Benefits Taxation: The Case Of Employer‐Provided Cars," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 52(4), pages 1105-1122, November.
  13. Berry, Steven & Levinsohn, James & Pakes, Ariel, 1995. "Automobile Prices in Market Equilibrium," Econometrica, Econometric Society, vol. 63(4), pages 841-90, July.
  14. repec:ucp:bkecon:9781884829987 is not listed on IDEAS
  15. Brons, Martijn & Nijkamp, Peter & Pels, Eric & Rietveld, Piet, 2008. "A meta-analysis of the price elasticity of gasoline demand. A SUR approach," Energy Economics, Elsevier, vol. 30(5), pages 2105-2122, September.
  16. Craft, Erik D. & Schmidt, Robert M., 2005. "An Analysis of the Effects of Vehicle Property Taxes on Vehicle Demand," National Tax Journal, National Tax Association, vol. 58(4), pages 697-720, December.
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