Optimal Car-related Taxes and Pricing in Beijing Considering the Marginal Cost of Public Funds

Jun Yoshida and Tatsuhito Kono

MPRA Paper from University Library of Munich, Germany

Abstract: This paper optimizes fuel tax, car ownership tax, highway tolls, and peak-time area pricing in Beijing with explicit consideration of marginal costs of public funds arising from these taxes and pricing. We establish two scenarios: scenario 1 optimizes the two taxes, tolls, and area pricing simultaneously; scenario 2 optimizes the two taxes and tolls without area pricing. Using Beijing’s parameters obtained from previous studies, our calculation results show that 1) the optimal area pricing is 50 CNY/entry; 2) Scenario 1 reduces the number of cars in peak time by more than 50%, but scenario 2 reduces it by 10%; 3) regardless of area pricing, fuel tax should be higher and car ownership tax lower. We do some sensitivity analyses to demonstrate the possible ranges of the tax and pricing instruments.

Keywords: Optimal taxation; Marginal cost of public funds; Externality; Area pricing (search for similar items in EconPapers)
JEL-codes: H2 R4 (search for similar items in EconPapers)
Date: 2020-07-07
New Economics Papers: this item is included in nep-pub, nep-reg, nep-tre and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:101728

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