Working papers in Transport Economics
Distributional effects of taxes on car fuel, use, ownership and purchases
(), Roger Pyddoke
() and Jan-Erik Swärdh
Abstract: We analyse distributional effects of four car-related tax
instruments: an increase of the fuel tax, a new kilometre tax, an increased
CO2-differentiated vehicle ownership tax, and a CO2-differentiated purchase
tax on new cars. Distributional effects are analysed with respect to
income, lifecycle category and several spatial dimensions. All the analysed
taxes are progressive over most of the income distribution, but just barely
regressive if the absolutely highest and lowest incomes are included.
However, the variation within income groups is substantial; the fraction of
the population who suffer substantial welfare losses relative to income is
much higher in lower income groups. The two most important geographical
distinctions are between rural and urban areas (including even small
towns), and between central cities and satellites/suburbs; these spatial
dimensions matter much more for distributional effects than for example
whether an area is remote or sparsely populated.
Keywords: Distributional effects; Equity effects; Fuel tax; Car ownership tax; (follow links to similar papers)
JEL-Codes: D63; H23; R48; (follow links to similar papers)
28 pages, April 15, 2016
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