Equity and transport policy reform
AbstractThe paper assesses the marginal welfare and equity impacts of three transport instruments in the presence of three transport externalities: congestion, air pollution and accidents. It considers a second-best economy in which the government has to use distortionary taxes for revenue-raising and distributional purposes. The assessment uses an applied general equilibrium model for Belgium. The transport instruments are: peak road pricing, the fuel tax and subsidies to public transport. They are introduced in a revenue-neutral way with the labour income tax, the lump sum social security transfers and other transport instruments serving as revenue- preserving instruments. It is shown that the equity effects of the transport instruments depend to a large extent on how revenue-neutrality is ensured. The political acceptability of transport policy reforms can therefore be enhanced by a careful design of the revenue-preserving strategies. Moreover, it is argued that distributional considerations cannot be ignored in the double dividend discussion.
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Bibliographic InfoPaper provided by Katholieke Universiteit Leuven, Centrum voor Economische Studiën, Energy, Transport and Environment in its series Energy, Transport and Environment Working Papers Series with number ete0114.
Length: 38 pages
Date of creation: Jul 2001
Date of revision:
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transport; externalities; tax reform; equity; applied general equilibrium;
Find related papers by JEL classification:
- H2 - Public Economics - - Taxation, Subsidies, and Revenue
- H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
- R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion
- D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
This paper has been announced in the following NEP Reports:
- NEP-ALL-2001-11-27 (All new papers)
- NEP-ENE-2001-11-27 (Energy Economics)
- NEP-ENT-2001-11-27 (Entrepreneurship)
- NEP-LAW-2001-11-27 (Law & Economics)
- NEP-NET-2001-11-27 (Network Economics)
- NEP-PBE-2001-11-27 (Public Economics)
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