Equity and transport policy reform

Inge Mayeres ()

Energy, Transport and Environment Working Papers Series from KU Leuven, Department of Economics - Research Group Energy, Transport and Environment

Abstract: The paper assesses the marginal welfare and equity impacts of three transport instruments in the presence of three transport externalities: congestion, air pollution and accidents. It considers a second-best economy in which the government has to use distortionary taxes for revenue-raising and distributional purposes. The assessment uses an applied general equilibrium model for Belgium. The transport instruments are: peak road pricing, the fuel tax and subsidies to public transport. They are introduced in a revenue-neutral way with the labour income tax, the lump sum social security transfers and other transport instruments serving as revenue- preserving instruments. It is shown that the equity effects of the transport instruments depend to a large extent on how revenue-neutrality is ensured. The political acceptability of transport policy reforms can therefore be enhanced by a careful design of the revenue-preserving strategies. Moreover, it is argued that distributional considerations cannot be ignored in the double dividend discussion.

Keywords: transport; externalities; tax reform; equity; applied general equilibrium (search for similar items in EconPapers)
JEL-codes: D58 H2 H23 R41 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2001-07
New Economics Papers: this item is included in nep-ene, nep-ent, nep-law, nep-net and nep-pbe
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Citations: View citations in EconPapers (10)

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Persistent link: https://EconPapers.repec.org/RePEc:ete:etewps:ete0114

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