Restructuring environmentally harmful transport subsidies: a case study of employee car benefits

When tax expenditures are used in the environmental policy context to either provide preferences to certain activities or to certain taxpayers, they have the tendency of giving rise to unintended consequences that manifest in negative environmental outcomes and economic inefficiencies. Chapter 6 examines the challenges encountered in re-structuring subsidies that have become perverse from an environmental policy perspective. The pervasive dimensions of the challenges encountered in this context makes a comprehensive examination of the issues in its entire spectrum is a matter that goes beyond the scope of this book. Hence a forensic examination of employee car subsidies will be used as a proxy to highlight some of the challenges involved in the wider context of dismantling harmful subsidies in the transport sector. The analysis will be carried out in the context of a comparative jurisdictional study of the various approaches adopted in restructuring the perverse outcomes of employee car subsidies. Some of the wider lessons of implementing subsidy reform are then extrapolated from the experiences of the countries examined.