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The taxation of motor fuel : international comparison

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  • Ley, Eduardo
  • Boccardo, Jessica

Abstract

This paper assesses whether the level of taxation of motor fuel is broadly appropriate in a group of countries (OECD, BRICs and South Africa) accounting for more than 80 percent of world greenhouse gas emissions. The analysis deals with emissions from oil combustion in transport, which account for about 40 percent of carbon dioxide emissions. In the benchmark specification, six countries (responsible, in turn, for more than 40 percent of worldwide motor-fuel greenhouse gas world emissions) would be undertaxing motor fuel. The authors evaluate the sensitivity of the results to the values of the elasticities and externalities that used in the analysis. They find that varying the values of these parameters (within the level of uncertainty reasonably associated with them) significantly affects the results. This implies that, while informative, the results must be taken as indicative. Further analysis for a particular country must rely on a well-informed choice for the values of the country-specific parameters.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 5212.

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Date of creation: 01 Feb 2010
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Handle: RePEc:wbk:wbrwps:5212

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Keywords: Transport Economics Policy&Planning; Energy Production and Transportation; Taxation&Subsidies; Climate Change Mitigation and Green House Gases; Climate Change Economics;

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  1. Amundsen, E.S. & Schob, R., 1999. "Environmental Taxes on Exhaustible Resources," Norway; Department of Economics, University of Bergen 192, Department of Economics, University of Bergen.
  2. Ahmad,Etisham & Stern,Nicholas, 1991. "The Theory and Practice of Tax Reform in Developing Countries," Cambridge Books, Cambridge University Press, number 9780521397421.
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  9. Pearce, David W, 1991. "The Role of Carbon Taxes in Adjusting to Global Warming," Economic Journal, Royal Economic Society, vol. 101(407), pages 938-48, July.
  10. Mendoza, Enrique G. & Razin, Assaf & Tesar, Linda L., 1994. "Effective tax rates in macroeconomics: Cross-country estimates of tax rates on factor incomes and consumption," Journal of Monetary Economics, Elsevier, vol. 34(3), pages 297-323, December.
  11. Bergstrom, Theodore C, 1982. "On Capturing Oil Rents with a National Excise Tax," American Economic Review, American Economic Association, vol. 72(1), pages 194-201, March.
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  13. Don Fullerton & Andrew Leicester & Stephen Smith, 2008. "Environmental Taxes," NBER Working Papers 14197, National Bureau of Economic Research, Inc.
  14. Maskin, Eric S & Newbery, David M, 1990. "Disadvantageous Oil Tariffs and Dynamic Consistency," American Economic Review, American Economic Association, vol. 80(1), pages 143-56, March.
  15. Aldy, Joseph E. & Ley, Eduardo & Parry, Ian W.H., 2008. "A Tax-Based Approach to Slowing Global Climate Change," Discussion Papers dp-08-26, Resources For the Future.
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Cited by:
  1. Parry, Ian & Strand, Jon, 2010. "International Fuel Tax Assessment: An Application to Chile," Discussion Papers dp-10-07, Resources For the Future.

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