Why truck distance taxes are contagious and drive fuel taxes to the bottom

Svante Mandell and Stef Proost

No 15/5, Working Paper Series from Royal Institute of Technology, Department of Real Estate and Construction Management & Banking and Finance

Abstract: This paper analyzes how countries with international and local truck traffic decide to switch from a simple fuel tax system to a dual system of fuel and kilometer taxes. We show what drives a country to switch and how this affects the level of fuel taxes and the incentives for the other countries to also adopt the dual system. The model is partially able to explain the gradual extension of kilometer charging for trucks in Europe. The model also shows that, in the absence of diesel cars, the gradual introduction of kilometer charges will make fuel taxation for trucks virtually disappear and will lead to a system where truck use is (1) taxed mainly based on distance, but (2) is taxed too heavily. When the fuel tax must in addition serve as an externality tax for diesel cars, the introduction of distance charges for trucks will give rise to diesel taxes that are lower than the external cost of diesel cars. For trucks, this leads to a sum of diesel taxes and distance charges that are higher than the external cost of trucks.

Keywords: Diesel taxes; fuel taxes; kilometer charges; tax competition; pricing of trucks (search for similar items in EconPapers)
JEL-codes: H23 H73 L91 R48 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2015-04-01
New Economics Papers: this item is included in nep-ene, nep-pbe, 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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Related works:
Journal Article: Why truck distance taxes are contagious and drive fuel taxes to the bottom (2016)
Working Paper: Why truck distance taxes are contagious and drive fuel taxes to the bottom (2015)
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