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Why truck distance taxes are contagious and drive fuel taxes to the bottom

Author

Listed:
  • Mandell Svante
  • Stef Proost

Abstract

This paper analyzes how countries with international and local truck traffic decide to switch from a simple fuel tax system to a dual system of fuel and kilometer taxes. We show what drives a country to switch and how this affects the level of fuel taxes and the incentives for the other countries to also adopt the dual system. The model is partially able to explain the gradual extension of kilometer charging for trucks in Europe. The model also shows that, in the absence of diesel cars, the gradual introduction of kilometer charges will make fuel taxation for trucks virtually disappear and will lead to a system where truck use is (1) taxed mainly based on distance, but (2) is taxed too heavily. When the fuel tax must in addition serve as an externality tax for diesel cars, the introduction of distance charges for trucks will give rise to diesel taxes that are lower than the external cost of diesel cars. For trucks, this leads to a sum of diesel taxes and distance charges that are higher than the external cost of trucks.

Suggested Citation

  • Mandell Svante & Stef Proost, 2015. "Why truck distance taxes are contagious and drive fuel taxes to the bottom," Working Papers of Department of Economics, Leuven 490748, KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven.
    • Handle: RePEc:ete:ceswps:490748
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    2. Anna Matas & Ginés de Rus & Stef Proost & Salvador Bertoméu-Sánchez & Antonio Estache, 2018. "The Financing of Infrastructure / La financiación de las infraestructuras / El finançament de les infraestructures," IEB Reports ieb_report_1_2018, Institut d'Economia de Barcelona (IEB).
    3. Nicole Adler & Eran Hanany & Stef Proost, 2022. "Competition in Congested Service Networks with Application to Air Traffic Control Provision in Europe," Management Science, INFORMS, vol. 68(4), pages 2751-2784, April.
    4. Fung, Chau Man & Proost, Stef, 2017. "Can we decentralize transport taxes and infrastructure supply?," Economics of Transportation, Elsevier, vol. 9(C), pages 1-19.
    5. Feder, Christophe, 2018. "Decentralization and spillovers: A new role for transportation infrastructure," Economics of Transportation, Elsevier, vol. 13(C), pages 36-47.
    6. Vierth , Inge & Schleussner , Heike & Mandell , Svante, 2015. "Road freight transport policies and their impact: a comparative study of Germany and Sweden," Working papers in Transport Economics 2015:16, CTS - Centre for Transport Studies Stockholm (KTH and VTI).
    7. Ovaere, Marten & Proost, Stef, 2025. "Strategic climate policy in global aviation: Aviation fuel taxes and efficiency standards with duopolistic aircraft producers," Economics of Transportation, Elsevier, vol. 41(C).
    8. Liang, Yuchao & Zheng, Guohua & Wang, Jinuo & Pang, Jun, 2025. "Does freight structure transformation improve air quality?–Evidence from China's “shifting freight from truck to rail” policy," Journal of Environmental Economics and Management, Elsevier, vol. 132(C).
    9. Mariano Gallo & Mario Marinelli, 2020. "Sustainable Mobility: A Review of Possible Actions and Policies," Sustainability, MDPI, vol. 12(18), pages 1-39, September.
    10. Christina Littlejohn & Stef Proost, 2022. "How to be a good forerunner in carbon neutral trucking," Revue d'économie industrielle, De Boeck Université, vol. 0(2), pages 167-197.

    More about this item

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects
    • L91 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Transportation: General
    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy

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