The Taxation of Motor Fuel: International Comparison

Eduardo Ley and Boccardo Jessica

MPRA Paper from University Library of Munich, Germany

Abstract: We apply the Parry-Small (2005) framework to asses whether the level taxation of motor fuel is broadly appropriate in a group of countries (OECD, BRICs and South Africa) accounting for more than 80 percent of world greenhouse gas (GHG) emissions. This paper deals with emissions from oil combustion in transport, which accounts for about 40 percent of \co2\ emissions. In the benchmark specification, we find that six countries (accounting, in turn, for more than 40 percent of motor-fuel GHG world emissions) would be undertaxing motor fuel. We evaluate the sensitivity of the results to the values of the elasticities and externalities that we use. We find that varying the values of these parameters (within the level of uncertainty reasonably associated with them) significantly affects the results. This implies that, while informative, the results must be taken as indicative. Further analysis for a particular country must rely in a well-informed choice for the values of their country-specific parameters.

Keywords: Fuel taxation; corrective taxation; climate change; greenhouse gas emissions (search for similar items in EconPapers)
JEL-codes: H21 H23 H87 Q48 Q58 (search for similar items in EconPapers)
Date: 2009-12-19
New Economics Papers: this item is included in nep-ene, nep-env and nep-pub
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https://mpra.ub.uni-muenchen.de/19583/2/MPRA_paper_19583.pdf revised version (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:19461

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