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Should diesel cars in Europe be discouraged?

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  • Inge Mayeres

    (K.U.Leuven, C.E.S., Energy, Transport and Environment)

  • Stef Proost

    (K.U.Leuven, C.E.S., Energy, Transport and Environment)

Abstract

This paper examines the rationale for the different tax treatment of gasoline and diesel cars currently observed in Europe. First, we analyse possible justifications for a different tax treatment: pure tax revenue considerations, externality considerations and constraints on the tax instruments used for cars and trucks. Next, an applied general equilibrium model is used to assess the welfare effects of revenue neutral changes in the vehicle and fuel taxes on diesel and gasoline cars. The model integrates the effects on tax revenue, environmental externalities, road congestion, accidents and income distribution.

Suggested Citation

  • Inge Mayeres & Stef Proost, 2000. "Should diesel cars in Europe be discouraged?," Energy, Transport and Environment Working Papers Series ete0005, KU Leuven, Department of Economics - Research Group Energy, Transport and Environment.
    • Handle: RePEc:ete:etewps:ete0005
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    References listed on IDEAS

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    1. De Borger, Bruno, 2001. "Discrete choice models and optimal two-part tariffs in the presence of externalities: optimal taxation of cars," Regional Science and Urban Economics, Elsevier, vol. 31(4), pages 471-504, July.
    2. Ian W. H. Parry & Antonio Bento, 2001. "Revenue Recycling and the Welfare Effects of Road Pricing," Scandinavian Journal of Economics, Wiley Blackwell, vol. 103(4), pages 645-671, December.
    3. Mayeres, Inge & Proost, Stef, 2001. "Marginal tax reform, externalities and income distribution," Journal of Public Economics, Elsevier, vol. 79(2), pages 343-363, February.
    4. Inge Mayeres & Stef Proost, 1997. "Optimal Tax and Public Investment Rules for Congestion Type of Externalities," Scandinavian Journal of Economics, Wiley Blackwell, vol. 99(2), pages 261-279, June.
    5. 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.
    6. Frank Verboven, 1996. "International Price Discrimination in the European Car Market," RAND Journal of Economics, The RAND Corporation, vol. 27(2), pages 240-268, Summer.
    7. Proost, Stef & Van Dender, Kurt, 2001. "The welfare impacts of alternative policies to address atmospheric pollution in urban road transport," Regional Science and Urban Economics, Elsevier, vol. 31(4), pages 383-411, July.
    8. repec:bla:scandj:v:99:y:1997:i:2:p:261-79 is not listed on IDEAS
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