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Spatial graduation of fuel taxes; consequences for cross-border and domestic fuelling

Author

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  • Rietveld, P.
  • Bruinsma, F. R.
  • van Vuuren, D. J.

Abstract

Substantial differences exist among fuel taxes between various countries. These differences represent a form of fiscal competition that has undesirable side effects because it leads to cross-border fuelling and hence to extra kilometres driven. One possible way of dealing with this problem of low fuel taxes in neighbouring countries is to introduce a spatial differentiation of taxes: low near the border and higher farther away. This paper contains an empirical analysis of the consequences of such a spatial graduation of fuel taxes for The Netherlands. Impacts on fuelling behaviour, vehicle kilometres driven, tax receipts, and sales by owners of gas stations are analysed. The appropriate slope of the graduation curve in order to prevent fuel-fetching trips is also discussed. Our conclusion is that in a small country such as The Netherlands, a spatial graduation of fuel taxes will lead to considerable problems, even when the graduation curve is not steep that fuel-fetching trips are prevented. The reason is that - given their activity patterns - car drivers will change the location of their fuelling activity leading to substantial problems for owners of gas stations in areas with high taxes.

Suggested Citation

  • Rietveld, P. & Bruinsma, F. R. & van Vuuren, D. J., 2001. "Spatial graduation of fuel taxes; consequences for cross-border and domestic fuelling," Transportation Research Part A: Policy and Practice, Elsevier, vol. 35(5), pages 433-457, June.
    • Handle: RePEc:eee:transa:v:35:y:2001:i:5:p:433-457
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    References listed on IDEAS

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    1. Rietveld, Piet & Boonstra, Jaap, 1995. "On the Supply of Network Infrastructure: Highways and Railways in European Regions," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 29(2), pages 207-220, May.
    2. Kanbur, Ravi & Keen, Michael, 1993. "Jeux Sans Frontieres: Tax Competition and Tax Coordination When Countries Differ in Size," American Economic Review, American Economic Association, vol. 83(4), pages 877-892, September.
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    Cited by:

    1. Bergeaud, Antonin & Raimbault, Juste, 2020. "An empirical analysis of the spatial variability of fuel prices in the United States," Transportation Research Part A: Policy and Practice, Elsevier, vol. 132(C), pages 131-143.
    2. Susan Xu Tang & David L. Sjoquist, 2019. "Differential Effects of Federal and State Gasoline Taxes on Gasoline Consumption," Hacienda Pública Española / Review of Public Economics, IEF, vol. 229(2), pages 11-32, June.
    3. Thomas Y. Mathä & Alessandro Porpiglia & Michael Ziegelmeyer, 2017. "Cross-border commuting and consuming: an empirical investigation," Applied Economics, Taylor & Francis Journals, vol. 49(20), pages 2011-2026, April.
    4. Banfi, Silvia & Filippini, Massimo & Hunt, Lester C., 2005. "Fuel tourism in border regions: The case of Switzerland," Energy Economics, Elsevier, vol. 27(5), pages 689-707, September.
    5. repec:mea:meawpa:14284 is not listed on IDEAS
    6. Balaguer, Jacint & Ripollés, Jordi, 2018. "Disentangling the importance of international border effects. Some evidence from Portugal–Spain based on diesel retailers," Economic Modelling, Elsevier, vol. 72(C), pages 260-269.
    7. Desiderio Romero-Jordán & Marta Jorge Garc𫑉n鳠 & Santiago Álvarez Garc𨀍, 2013. "The impact of fuel tourism on retailers’ diesel price in Spanish neighbouring regions," Applied Economics, Taylor & Francis Journals, vol. 45(4), pages 407-413, February.
    8. Charles Raux, 2011. "Downstream Emissions Trading for Transport," Transportation Research, Economics and Policy, in: Werner Rothengatter & Yoshitsugu Hayashi & Wolfgang Schade (ed.), Transport Moving to Climate Intelligence, chapter 0, pages 209-226, Springer.
    9. Leal, Andrés & López-Laborda, Julio & Rodrigo, Fernando, 2009. "Prices, taxes and automotive fuel cross-border shopping," Energy Economics, Elsevier, vol. 31(2), pages 225-234.
    10. repec:kap:iaecre:v:16:y:2010:i:2:p:135-148 is not listed on IDEAS
    11. Jansen, David-Jan & Jonker, Nicole, 2018. "Fuel tourism in Dutch border regions: Are only salient price differentials relevant?," Energy Economics, Elsevier, vol. 74(C), pages 143-153.
    12. Rietveld, Piet & van Woudenberg, Stefan, 2005. "Why fuel prices differ," Energy Economics, Elsevier, vol. 27(1), pages 79-92, January.
    13. Andrés Leal & Julio López-Laborda & Fernando Rodrigo, 2010. "Cross-Border Shopping: A Survey," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 16(2), pages 135-148, May.
    14. Jacint Balaguer & Jordi Ripollés, 2018. "Revisiting the importance of border effect in sub‐national regions. Evidence from a quasi‐experimental design," Papers in Regional Science, Wiley Blackwell, vol. 97(4), pages 1113-1130, November.
    15. Jansen, David-Jan & Jonker, Nicole, 2018. "Fuel tourism in Dutch border regions: Are only salient price differentials relevant?," Energy Economics, Elsevier, vol. 74(C), pages 143-153.
    16. Hung, Wing-Tat, 2006. "Taxation on vehicle fuels: its impacts on switching to cleaner fuels," Energy Policy, Elsevier, vol. 34(16), pages 2566-2571, November.

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