1887

OECD Taxation Working Papers

Working papers from the Centre for Tax Policy and Administration of the OECD that cover the full range of the Centre’s work on taxation with the main focus on tax policy related issues.

English, French

Taxing vehicles, fuels, and road use

Opportunities for improving transport tax practice

This paper discusses the main external costs related to road transport and the design of taxes to manage them. It provides an overview of evolving tax practice in the European Union and the United States and identifies opportunities for better alignment of transport taxes with external costs. There is considerable scope for improving transport tax practice, notably by increasing the use of taxes based on road use. Distance charges offer great promise in delivering more efficient road transport. In heavily congested areas, targeted charges are a cost-effective way of reducing congestion.

Fiscal objectives provide an impetus for change as improving vehicle fuel efficiency and fleet penetration of alternative fuel vehicles erode traditional tax bases, particularly those relating to fossil fuel use. A gradual shift from an energy-based approach towards distance-based transport taxes has the potential to establish a stable tax base in the road transport sector in the long run.

English

Keywords: congestion, pollution, external costs, congestion charging, distance-charges, road transport, fuel taxes
JEL: R4: Urban, Rural, Regional, Real Estate, and Transportation Economics / Transportation Economics; Q58: Agricultural and Natural Resource Economics; Environmental and Ecological Economics / Environmental Economics / Environmental Economics: Government Policy; R41: Urban, Rural, Regional, Real Estate, and Transportation Economics / Transportation Economics / Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise; H23: Public Economics / Taxation, Subsidies, and Revenue / Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies; R48: Urban, Rural, Regional, Real Estate, and Transportation Economics / Transportation Economics / Transportation Economics: Government Pricing and Policy
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