Why truck distance taxes are contagious and drive fuel taxes to the bottom
2016 (English)In: Journal of Urban Economics, ISSN 0094-1190, E-ISSN 1095-9068, Vol. 93, 1-17 p.Article in journal (Refereed) PublishedText
This paper analyzes the way in which countries with international and local truck traffic decide to switch from a simple fuel tax system to a dual system of fuel and distance charge taxes. We show what drives a country to switch and how this affects the level of fuel taxes as well as incentives for other countries to also adopt the dual system. The model is partially able to explain the gradual extension of kilometer charging for trucks in Europe. The model also shows that, in the absence of diesel cars, the gradual introduction of kilometer charges will make fuel taxation for trucks virtually disappear and will lead to a system where truck use is (1) taxed mainly based on distance, (2) is taxed too heavily, and (3) where highest distance taxes are expected in transit countries with a strong market position. When the fuel tax must in addition serve as an externality tax for diesel cars, the introduction of distance charges for trucks will give rise to diesel taxes that are lower than the external cost of diesel cars. For trucks, this leads to a sum of diesel taxes and distance charges that are higher than the external cost of trucks.
Place, publisher, year, edition, pages
Academic Press Inc. , 2016. Vol. 93, 1-17 p.
Diesel taxes, Fuel taxes, Kilometre charges, Pricing of trucks, Tax competition
Transport Systems and Logistics Economics and Business
IdentifiersURN: urn:nbn:se:kth:diva-186972DOI: 10.1016/j.jue.2016.02.001ISI: 000377738200001ScopusID: 2-s2.0-84959370854OAI: oai:DiVA.org:kth-186972DiVA: diva2:929942
QC 201605202016-05-202016-05-162016-07-11Bibliographically approved