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Reforming the Tax System to Promote Environmental Objectives

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  • Ian W.H. Parry

Abstract

Fiscal instruments are potentially among the most effective, and cost-effective, options for addressing externalities related to poor air quality, urban road congestion, and greenhouse gases. This paper takes a case study, focused on Mauritius (a pioneer in the use of green taxes) to illustrate how existing taxes, especially on fuels and vehicles, could be reformed to better address these externalities. We discuss, in particular, an explicit carbon tax; a variety of options for reforming vehicle taxes to meet environmental, equity, and revenue objectives; and a progressive transition to usage-based vehicle taxes to address congestion

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 11/124.

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Length: 39
Date of creation: 01 Jun 2011
Date of revision:
Handle: RePEc:imf:imfwpa:11/124

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Related research

Keywords: Mauritius; Climatic changes; Energy taxes; Environmental policy; Greenhouse gas emissions; Tax reforms; Tax systems; Taxation; road; fuel economy; traffic congestion; roads; road tax; road network; greenhouse gas; vehicle use; congestion pricing; fuel tax; fossil fuels; energy efficiency; engine capacity; motor vehicles; road development; congestion charging; oxides of nitrogen; road users; public transport; gas emissions; trucks; rush hour; gasoline tax; congestion costs; diesel fuel; carbon content; air pollution; traffic accidents; vehicle miles; electric vehicles; fine particulates; fossil fuel; freeway; road transport; driving behavior; major roads; transport authority; greenhouse gases; motor vehicle; hov lanes; fuel efficiency; traffic flows; fuel savings; road capacity; cardiovascular diseases; road system; global pollution; emission rate; road taxes; types of vehicles; tailpipe emissions; alternative fuel vehicles; urban air quality; vehicle characteristics; fuel injection; land transport; ambient particulate concentrations; gasoline demand; vehicle emission; road infrastructure; vehicle occupants; high carbon content; used vehicles; gasoline vehicle; alternative fuel; gasoline diesel; bypass; urban road; ring road; expressways; traffic engineering; road accident; road wear; road deaths; clean technologies; emergency vehicles; car pool; end-of-pipe; natural gas; chronic bronchitis; road accidents; clean energy; carpooling; public roads; gasoline prices; advanced fuel; particulate concentrations; carbon dioxide; motorcycles; vehicle emissions;

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References

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  1. Lucas W. Davis, 2008. "The Effect of Driving Restrictions on Air Quality in Mexico City," Journal of Political Economy, University of Chicago Press, vol. 116(1), pages 38-81, 02.
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  15. Greene, David L. & Patterson, Philip D. & Singh, Margaret & Li, Jia, 2005. "Corrigendum to "Feebates, rebates and gas-guzzler taxes: a study of incentives for increased fuel economy" [Energy Policy 33 (2005) 757-775]," Energy Policy, Elsevier, vol. 33(14), pages 1901-1902, September.
  16. Eskeland, Gunnar S, 1994. "A Presumptive Pigovian Tax: Complementing Regulation to Mimic an Emissions Fee," World Bank Economic Review, World Bank Group, vol. 8(3), pages 373-94, September.
  17. Jerry A. Hausman, 1979. "Individual Discount Rates and the Purchase and Utilization of Energy-Using Durables," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 33-54, Spring.
  18. Greene, David L. & Patterson, Philip D. & Singh, Margaret & Li, Jia, 2005. "Feebates, rebates and gas-guzzler taxes: a study of incentives for increased fuel economy," Energy Policy, Elsevier, vol. 33(6), pages 757-775, April.
  19. Muller, Nicholas Z. & Mendelsohn, Robert, 2007. "Measuring the damages of air pollution in the United States," Journal of Environmental Economics and Management, Elsevier, vol. 54(1), pages 1-14, July.
  20. Ian W.H. Parry & Wallace E. Oates, 2000. "Policy analysis in the presence of distorting taxes," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 19(4), pages 603-613.
  21. Parry, Ian & Fischer, Carolyn & Harrington, Winston, 2004. "Should Corporate Average Fuel Economy (CAFE) Standards Be Tightened?," Discussion Papers dp-04-53, Resources For the Future.
  22. Kenneth A. Small & Kurt Van Dender, 2007. "Fuel Efficiency and Motor Vehicle Travel: The Declining Rebound Effect," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 25-52.
  23. Parry, Ian W.H. & Williams, Roberton C., 2011. "Moving U.S. Climate Policy Forward: Are Carbon Taxes the Only Good Alternative?," Discussion Papers dp-11-02, Resources For the Future.
  24. Hammitt James K. & Robinson Lisa A, 2011. "The Income Elasticity of the Value per Statistical Life: Transferring Estimates between High and Low Income Populations," Journal of Benefit-Cost Analysis, De Gruyter, vol. 2(1), pages 1-29, January.
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