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The Efficient Combination of Taxes on Fuel and Vehicles

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  • Geir H. M. Bjertnaes

Abstract

A tax on fuel combined with tax-exemptions or subsidies for purchase of fuel-efficient vehicles is implemented in many countries to reduce greenhouse gas emissions and other negative externalities from road traffic. This study, however, shows that a tax on fuel should be combined with heavier taxation of fuel-efficient vehicles to curb externalities from road traffic. The tax on fuel is implemented to curb externalities linked to both consumption of fuel and road use. The heavier tax on fuel-efficient vehicles prevents that motorists avoid the road user charge on fuel by purchasing fuel-efficient vehicles.

Suggested Citation

  • Geir H. M. Bjertnaes, 2017. "The Efficient Combination of Taxes on Fuel and Vehicles," CESifo Working Paper Series 6789, CESifo.
    • Handle: RePEc:ces:ceswps:_6789
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    Cited by:

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    2. Firth, Anton & Zhang, Bo & Yang, Aidong, 2019. "Quantification of global waste heat and its environmental effects," Applied Energy, Elsevier, vol. 235(C), pages 1314-1334.
    3. Geir H. M. Bjertnæs, 2019. "Efficient taxation of fuel and road use," Discussion Papers 905, Statistics Norway, Research Department.
    4. Greenwald, Judith M. & Kornhauser, Alain, 2019. "It’s up to us: Policies to improve climate outcomes from automated vehicles," Energy Policy, Elsevier, vol. 127(C), pages 445-451.
    5. Martin Adler & Stefanie Peer & Tanja Sinozic, 2019. "Autonomous, Connected, Electric Shared vehicles (ACES) and public finance: an explorative analysis," Tinbergen Institute Discussion Papers 19-005/VIII, Tinbergen Institute.

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    More about this item

    Keywords

    transportation; optimal taxation; environmental taxation; global warming;
    All these keywords.

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy

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