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Equity and transport policy reform

  • Inge Mayeres

    ()

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

The paper assesses the marginal welfare and equity impacts of three transport instruments in the presence of three transport externalities: congestion, air pollution and accidents. It considers a second-best economy in which the government has to use distortionary taxes for revenue-raising and distributional purposes. The assessment uses an applied general equilibrium model for Belgium. The transport instruments are: peak road pricing, the fuel tax and subsidies to public transport. They are introduced in a revenue-neutral way with the labour income tax, the lump sum social security transfers and other transport instruments serving as revenue- preserving instruments. It is shown that the equity effects of the transport instruments depend to a large extent on how revenue-neutrality is ensured. The political acceptability of transport policy reforms can therefore be enhanced by a careful design of the revenue-preserving strategies. Moreover, it is argued that distributional considerations cannot be ignored in the double dividend discussion.

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File URL: http://www.econ.kuleuven.ac.be/ew/academic/energmil/downloads/ete-wp01-14.pdf
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Paper provided by Katholieke Universiteit Leuven, Centrum voor Economische Studiën, Energy, Transport and Environment in its series Energy, Transport and Environment Working Papers Series with number ete0114.

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Length: 38 pages
Date of creation: Jul 2001
Date of revision:
Handle: RePEc:ete:etewps:ete0114
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