Optimal kilometre tax for electric passenger cars

Maria Börjesson (), Disa Asplund () and Carl Hamilton
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Maria Börjesson: Swedish National Road & Transport Research Institute (VTI), Postal: Dept. of Transport Economics, P.O. Box 55685, SE-102 15 Stockholm, Sweden, https://www.vti.se/en/employees/maria-bratt-borjesson
Disa Asplund: Swedish National Road & Transport Research Institute (VTI), Postal: Dept. of Transport Economics, P.O. Box 55685, SE-102 15 Stockholm, Sweden
Carl Hamilton: Swedish National Road & Transport Research Institute (VTI), Postal: Dept. of Transport Economics, P.O. Box 55685, SE-102 15 Stockholm, Sweden

No 2021:3, Working Papers from Swedish National Road & Transport Research Institute (VTI)

Abstract: We simulate the external costs from road transport in a 2040 scenario where all gasoline vehicles are replaced by EV’s, and we do this for the densest regions of Sweden with a similar degree of urbanization to many other European countries, including cities, suburbs, towns and rural areas. We analyse the optimal kilometre tax based on three motives for taxing use and ownership of EVs: internalizing external cost, cost recovery of the public spending on the road sector, and fiscal taxation for raising revenue over and above what is justified by the two previous principles. We conclude that the optimal Pigouvian tax will be too low to justify the cost of a nationwide GPS-based kilometre tax for many years ahead, for which enforcement would drive the cost. Taxes collected based on roadside equipment systems in the big cities and surrounding highways would be a substantially cheaper way of internalizing most of the congestion cost. A shift from fuel taxes to national congestion taxes would, however, imply a large transfer of resources from the biggest city or cities to the rest of the country, where most of the kilometres are driven

Keywords: Kilometre tax; Milage tax; Congestion charges; Equity; Infrastructure investments; Electric cars; Fiscal taxes; Benefit principle (search for similar items in EconPapers)
JEL-codes: R12 R41 R42 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2021-06-07
New Economics Papers: this item is included in nep-ene, nep-reg, nep-tre and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:vtiwps:2021_003

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