1 / 23

Road Pricing and Gasoline Taxes: The Issues

Road Pricing and Gasoline Taxes: The Issues. Marielle Vena Economics 539 March 9, 2009. Focus. What are the issues at the center of the academic research on gasoline taxes? Why are they needed? Why do they need to be increased? Are there alternatives that could achieve the same outcomes?

jafari
Télécharger la présentation

Road Pricing and Gasoline Taxes: The Issues

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Road Pricing and Gasoline Taxes:The Issues Marielle Vena Economics 539 March 9, 2009

  2. Focus • What are the issues at the center of the academic research on gasoline taxes? • Why are they needed? • Why do they need to be increased? • Are there alternatives that could achieve the same outcomes? • What are the distributional effects of these policies?

  3. The Literature • 23 articles published in journals such as: • American Economic Review • Transportation Quarterly • National Tax Journal • Journal of Policy Analysis & Management • Journal of Environmental Economics & Management • Applied Economics Letters • Journal of Transport Economics & Policy • IEEE Systems Journal • Ecological Economics • 4 pieces from the popular press • Provide general information and are not given the same consideration as the academic literature presented

  4. History and Necessity • The first gas tax was implemented in the U.S. by the federal government in 1932 • Designed to function as a road “user fee” that charges motorists for the damage they cause to the roads • Primary source of funding for U.S transportation projects

  5. Shortfall • The revenues from gasoline taxes no longer cover the expenditures needed to maintain and construct the roads • Inflation • Real value of CA state gas tax in 1996 is the same level as it was in the 1920s (Ang-Olson, Wachs, and Taylor, 2000) • Vehicle Fleet becoming more fuel efficient • Cause the same damage to the roads, but contribute less fuel tax (Porter and Kim, 2008) • Rising costs of transportation facilities materials • Engineering Newsrecord Construction Cost Index, which tracks the prices of various material inputs in several cities over time >> 817% increase in these costs from 1957 to 2002 (Wachs, 2003)

  6. Consequences • Expect the deficit of the Highway Trust Fund to increase and become unsustainable • Growing trend of borrowing to cover the costs of transportation • Increased 18% from 1995 to 1999 (Wachs, 2003) • 1998 survey of 40 economists reveals unanimous support for a 25 cent increase in the gas tax (Wachs, 2003) • What is the optimal level of taxation?

  7. The Optimal Tax • Goals are efficiency and equity • Equity is addressed in the discussion of distributional effects • An efficient user fee would charge motorists a tax exactly proportional to the cost of the damage done to the roads • Highway user fees are about 20% below highway-related expenditures, for all levels of government and all vehicle classes in the US in 2000, according the the 1997 Highway Cost Allocation Study (Delucchi, 2007) • Recommends increase of 20-70 cents per gallon • This is prohibitively large, considering the average current combined state and federal tax is around 38 cents

  8. The Optimal Tax: Europe • Optimal level of U.S. tax is more than double the current rate, while the UK optimal is exceeded by half (Parry and Small, 2005) • US gas tax is among the lowest of all industrial countries • European taxes per gallon average 20 times US federal rates (Chouinard and Perloff, 2004) • Generate a larger share of the country’s tax revenue • Funds not restricted to use for transportation projects

  9. Fuel Consumption • Microeconomic theory suggests that increasing gas prices, such as with a tax levied on consumers, will result in a decrease in the quantity of fuel purchased and consumed (Austin and Dinan, 2005) • Public consensus favors reducing fuel consumption for a variety of reasons

  10. Fuel Consumption: Homeland Security • Hsing (1994), Parry (2005), and Hsu, Walters, and Purgas (2008) convey the potential homeland security benefits that may be achieved from reducing gasoline consumption by diminishing the country’s dependence on foreign suppliers

  11. Fuel Consumption: Emissions and the Environment • The environmental benefits of reducing fuel consumption through a gasoline tax are addressed by Walls and Hanson (1999), Sipes and Mendelsohn (2001), Khazzoom (1991), and Yohe (2007). • Amount of pollution from vehicle emissions is a function of fuel usage • Despite the introduction of more fuel efficient vehicles, emissions continue to rise because of: • Preferences for larger engine size • More vehicles on the roads each year • Vehicles are driving more miles

  12. Fuel Consumption: Reverse Causality • One of the most important conclusions from Hammar, Lofgren, and Sterner (2004) is their evidence to suggest some reverse causality in the relationship between gasoline taxes and consumption • not only do low taxes and thus low (gas) prices encourage high consumption, but high levels of consumption also lead to considerable pressure against raising the taxes

  13. Pollution Taxes • Research suggests some potential for gasoline taxes to reduce vehicle emissions could also be achieved through pollution taxes • Often seen as one of the most cost-effective means of reducing pollution. • Widely opposed by individuals and governments (Hsu, Walters, and Purgas, 2008) • Fullerton and West (2002) examine the potential for adjusting the gasoline tax to create the market incentives of a pollution tax, looking at both homogeneous consumers and heterogeneous consumers, which allows them to account for preferences regarding engine size and miles

  14. Alternatives • Address funding and/or environmental concers: • Indexed Gasoline Taxes (Ang-Olson, Wachs, and Taylor, 2000) • Grams-per-mile Gasoline Taxes (vs. grams-per-gallon) (Khazzoom, 1991) • Vehicle Miles Travelled Taxes (Porter and Kim, 2008, and West, 2004) • CAFE standards (Austin and Dinan, 2005, and West and Williams, 2005) • Pay-As-You-Drive Insurance (Parry, 2005)

  15. Distributional Effects • Bento et al. (2005) and West and Williams (2004) consider the distributional effects of different aspects of gasoline taxes. • Poorer HHs tend to drive fewer miles, but fuel purchases make up a larger portion of their income • Focuses on how the effects differ depending on how the revenues are “recycled” back into the system • using the additional gasoline tax revenue to fund lump-sum transfers actually makes the policy progressive (West and Williams, 2004)

  16. Distributional Effects • West (2005), West (2004) and Walls and Hanson (1999) reflect on the distributional effects of emissions taxes. • Poorer HHs tend to drive older, dirtier vehicles • VMT taxes are the least regressive option, and for some income groups are actually progressive (West, 2004)

  17. Literature Analysis • Trends observed that speak to the credibility of the academic literature and contributed to the selection of these articles over other potential choices: • methods used and data sources of the research in these articles is explained in enough detail to make their results replicable by other researchers with similar knowledge and expertise, as with Bento et al. (2005) and Walls and Hanson (1999). Sipes and Mendelsohn (2001), include appendices to their article detailing their survey methods (307).

  18. Literature Analysis • Not all of these articles present literature from other viewpoints, such as Wachs (2003) • The authors of each article do provide some degree of theoretical justification for their decisions, such as Austin and Dinan (2005) • Specifically address how a model or functional form is chosen, as in Fullerton and West (2002) • Explain how the work in question fills any gaps or provides additional contributions to the study of the subject, as exhibited by Delucchi (2007).

  19. Literature Analysis • Include different specifications, like Hsing (1994), to discover to what extent the choice of models impacts the results. • West and Williams (2005), explain what steps have been taken to ensure that any necessary adjustments have been made such that the results generated are robust.

  20. Literature Analysis • Parry and Small (2005), acknowledge the potential limitations of their study, as do many of the other articles: • They address how results might be interpreted, as in Hsu, Walters, and Purgas’ (2008) discussion of the metric effect • Include sections detailing the rationale for and effects of certain assumptions, as in Parry (2005). • Make suggestions regarding how future research can be improved or made more complete, as demonstrated by Porter and Kim (2008) and Kulash (2001).

  21. Literature Analysis • Overall, the academic literature presented in my paper can be deemed credible not only by the virtue of its publication, but because each article was screened to meet the above selection criteria and represent the richest and most reliable information available on the subject of gasoline taxes.

  22. Conclusion • Gravity of the funding crisis suggests the need for further research and analysis • OR VMT tax experiment especially promising in terms of its efficiency and equity benefits, but faces obstacles: • Public Opinion • Large-scale distribution of new RFID technology

  23. Questions?

More Related