Scandinavian Working Papers in Economics

Working papers in Transport Economics,
CTS - Centre for Transport Studies Stockholm (KTH and VTI)

No 2016:11: Distributional effects of taxes on car fuel, use, ownership and purchases

Jonas Eliasson (), Roger Pyddoke () and Jan-Erik Swärdh ()
Additional contact information
Jonas Eliasson: KTH, Postal: Centrum för Transportstudier (CTS), Teknikringen 10, 100 44 Stockholm, Sweden
Roger Pyddoke: VTI, Postal: Centrum för Transportstudier (CTS), Teknikringen 10, 100 44 Stockholm, Sweden
Jan-Erik Swärdh: VTI, Postal: Centrum för Transportstudier (CTS), Teknikringen 10, 100 44 Stockholm, Sweden

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

JEL-codes: D63; H23; R48

28 pages, April 15, 2016

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CTS2016-11.pdf PDF-file 

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