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Taxes and Traffic in Asian Cities: Ownership and use taxes on Autos in Singapore

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Abstract

This paper presents a simple general equilibrium model involving trips from residential areas to a central business district, along with modal choice between cars and public transit. Using a calibrated numerical model, we investigate the relative merits of ownership and use taxes. The proposed model is used to evaluate traffic control policies in Singapore and can be used in other Asian countries. We compare full internalisation of congestion externalities to optimal tax outcomes for the different tax types. In our framework, use taxes restore Pareto optimality since congestion damage rises with more trips. Ownership taxes only partially internalise congestion externalities. However, in terms of revenue-raising ability, the marginal excess burdens in the neighbourhood of optimal taxes are typically lower for ownership taxes than use taxes.

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  • Ngee-Choon Chia & Albert K C Tsui & John Whalley, 2003. "Taxes and Traffic in Asian Cities: Ownership and use taxes on Autos in Singapore," University of Western Ontario, Departmental Research Report Series 20035, University of Western Ontario, Department of Economics.
    • Handle: RePEc:uwo:uwowop:20035
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    1. Kenneth Button, 1993. "Transport, The Environment And Economic Policy," Books, Edward Elgar Publishing, number 69.
    2. Ngee-Choon Chia & Sock-Yong Phang, 2001. "Motor vehicle taxes as an environmental management instrument: the case of Singapore," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 4(2), pages 67-93, June.
    3. Kenneth Button & Erik Verhoef (ed.), 1998. "Road Pricing, Traffic Congestion and the Environment," Books, Edward Elgar Publishing, number 940.
    4. Small, Kenneth A., 1983. "The incidence of congestion tolls on urban highways," Journal of Urban Economics, Elsevier, vol. 13(1), pages 90-111, January.
    5. Hau, Timothy D., 1992. "Economic fundamentals of road pricing : a diagrammatic analysis," Policy Research Working Paper Series 1070, The World Bank.
    6. Vickrey, William S, 1969. "Congestion Theory and Transport Investment," American Economic Review, American Economic Association, vol. 59(2), pages 251-260, May.
    7. McCarthy Patrick & Tay Richard, 1993. "Economic Efficiency vs Traffic Restraint: A Note on Singapore's Area License Scheme," Journal of Urban Economics, Elsevier, vol. 34(1), pages 96-100, July.
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