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What does improved fuel economy cost consumers and taxpayers? Some illustrations

Auteur : Van Dender Kurt, Crist Philippe
Date de publication : 25/11/2010
Type : Exposé
Thème : Transport

Résumé/Sommaire :

“Green growth” is a useful emerging paradigm that re-packages several existing concepts, including durable economic activity, reduced environmental impact and sustained growth in highquality jobs, under one banner and in such a way as to frame coherent, cross-sectoral policies. Focusing on “green growth” as such does not obviate the need for governments to assess policies carefully according to their long-term economic, environmental and social impacts. There are tradeoffs between the various dimensions of green growth and government policies determine who gains and who loses. As we hope to show in this paper, an examination of “green growth” policies in the transport sector provides an interesting case in point. Reducing emissions comes at a cost to road users and to taxpayers and it may be necessary to review the way the transport sector is taxed and contributes to aggregate tax revenue. In Section 2 of this paper, we first discuss the impact of fuelefficiency enhancing policies in the transport sector on government fuel tax revenue. In Section 3, we then use a simple stylized model to illustrate how fuel economy improvements are valued by drivers and how they affect fuel tax revenues. We also look into the potential of kilometre taxes to compensate for the erosion of the fuel tax base. Section 4 discusses our results in a policy context and offers concluding remarks.

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