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Commuting, Transport Tax Reform and the Labour Market: Employer-paid Parking and the Relative Efficiency of Revenue Recycling Instruments

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  • Bruno De Borger

    (Department of Economics, University of Antwerp, Prinsstraat 13, Antwerp, B-2000, Belgium, bruno.deborger@ua.ac.be)

  • Bart Wuyts

    (Department of Economics, University of Antwerp, Prinsstraat 13, Antwerp, B-2000, Belgium, bart.wuyts@ua.ac.be)

Abstract

In this paper, the welfare effects of a budget-neutral increase in taxes on car commuters are studied in a model that takes into account the presence of employer-paid parking at the workplace. It is found that the presence of employer-paid parking substantially increases the welfare effect of such a tax reform, independent of the use of the revenues: congestion taxes not only correct congestion externalities, they also reduce the inefficiency caused by employer-paid parking. Moreover, different congestion effects of alternative recycling instruments and the presence of employer-paid parking jointly imply that recycling the tax revenues via higher public transport subsidies may yield much more favourable welfare effects than previously believed. It can easily outperform recycling the tax revenues via lower labour taxes. Finally, cashing out parking costs to public transport users is found to generate substantial positive welfare effects. Numerical analysis confirms the theory.

Suggested Citation

  • Bruno De Borger & Bart Wuyts, 2009. "Commuting, Transport Tax Reform and the Labour Market: Employer-paid Parking and the Relative Efficiency of Revenue Recycling Instruments," Urban Studies, Urban Studies Journal Limited, vol. 46(1), pages 213-233, January.
  • Handle: RePEc:sae:urbstu:v:46:y:2009:i:1:p:213-233
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    References listed on IDEAS

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    1. Anderson, Simon P. & de Palma, Andre, 2004. "The economics of pricing parking," Journal of Urban Economics, Elsevier, vol. 55(1), pages 1-20, January.
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    Citations

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    Cited by:

    1. Fetene, Gebeyehu M. & Hirte, Georg & Kaplan, Sigal & Prato, Carlo G. & Tscharaktschiew, Stefan, 2016. "The economics of workplace charging," Transportation Research Part B: Methodological, Elsevier, vol. 88(C), pages 93-118.
    2. Stef Proost, 2011. "Theory of External Costs," Chapters,in: A Handbook of Transport Economics, chapter 14 Edward Elgar Publishing.
    3. repec:eee:juecon:v:104:y:2018:i:c:p:35-46 is not listed on IDEAS
    4. Hirte, Georg & Tscharaktschiew, Stefan, 2011. "Income tax deduction of commuting expenses and tax funding in an urban CGE study: the case of German cities," Dresden Discussion Paper Series in Economics 02/11, Technische Universität Dresden, Faculty of Business and Economics, Department of Economics.
    5. van Ommeren, Jos & Wentink, Derk & Dekkers, Jasper, 2011. "The real price of parking policy," Journal of Urban Economics, Elsevier, vol. 70(1), pages 25-31, July.
    6. repec:eee:transb:v:101:y:2017:i:c:p:107-122 is not listed on IDEAS
    7. Jan K. Brueckner & Sofia F. Franco, 2017. "Employer-Paid Parking, Mode Choice, and Suburbanization," CESifo Working Paper Series 6298, CESifo Group Munich.

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