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Equity and transport policy reform

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Author Info

  • Inge Mayeres

    ()
    (K.U.Leuven, C.E.S., Energy, Transport and Environment)

Abstract

The 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 Info

Paper 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.

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Length: 38 pages
Date of creation: Jul 2001
Date of revision:
Handle: RePEc:ete:etewps:ete0114

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Related research

Keywords: transport; externalities; tax reform; equity; applied general equilibrium;

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Cited by:
  1. Ian W.H. Parry & Hilary Sigman & Margaret Walls & Roberton C. Williams III, 2005. "The Incidence of Pollution Control Policies," NBER Working Papers 11438, National Bureau of Economic Research, Inc.
  2. Parry, Ian W. H., 2004. "Are emissions permits regressive?," Journal of Environmental Economics and Management, Elsevier, vol. 47(2), pages 364-387, March.
  3. Stef Proost & Inge Mayeres, 2005. "Towards better transport pricing and taxation in Belgium," Energy, Transport and Environment Working Papers Series ete0504, Katholieke Universiteit Leuven, Centrum voor Economische Studiën, Energy, Transport and Environment.
  4. Charlotte Berg, 2007. "Household Transport Demand in a CGE-framework," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 37(3), pages 573-597, July.

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