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Title
Abstract
Figures
Simulation Results
The Implications of Equity Considerations
Conclusions
References
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Economics
Taxation

Equity and transport policy reform

Profile image of Inge MayeresInge Mayeres

2001

Abstract

The paper assesses the marginal welfare and equity impacts of three transport instruments for 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 model includes three types of external costs of transport: congestion, air pollution and accidents. 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.

Figures (14)
The share of the quintiles in total household expenditures and income On the expenditure side, the quintiles’ spending on car transport roughly follows the same pattern
The share of the quintiles in total household expenditures and income On the expenditure side, the quintiles’ spending on car transport roughly follows the same pattern
The average consumer demand elasticities in the benchmark equilibrium Conforming to empirical evidence, peak transport is more price elastic than off-peak transport.
The average consumer demand elasticities in the benchmark equilibrium Conforming to empirical evidence, peak transport is more price elastic than off-peak transport.
The consumers’ value of a marginal time saving in transport in the benchmark equilibrium Given the way in which congestion is modeled, the VOT is affected by the tax reforms. Table 4 presents the calibrated average elasticity of the VOT w.r.t. its determinants in the
The consumers’ value of a marginal time saving in transport in the benchmark equilibrium Given the way in which congestion is modeled, the VOT is affected by the tax reforms. Table 4 presents the calibrated average elasticity of the VOT w.r.t. its determinants in the
The average elasticity of the VOT with respect to its main determinants in the benchmark equilibrium
The average elasticity of the VOT with respect to its main determinants in the benchmark equilibrium
The marginal external costs of air pollution
The marginal external costs of air pollution
The quintiles’ marginal willingness to pay for a reduction in emissions q g g pay
The quintiles’ marginal willingness to pay for a reduction in emissions q g g pay
Road transport: the marginal external costs and the taxes in the benchmark equilibrium 3 The marginal welfare effect of three transport instruments with various revenue-preserving strategies
Road transport: the marginal external costs and the taxes in the benchmark equilibrium 3 The marginal welfare effect of three transport instruments with various revenue-preserving strategies
“ The values between brackets refer to the tax on business car transport Freight transport
“ The values between brackets refer to the tax on business car transport Freight transport
The reader should bear in mind that the welfare effects are not neutral with respect to our
The reader should bear in mind that the welfare effects are not neutral with respect to our
The marginal welfare impact of the three transport instruments with variou: revenue-preserving strategies
The marginal welfare impact of the three transport instruments with variou: revenue-preserving strategies
PRP = peak road pricing, FT = fuel tax, SPT = subsidy to public transport, LST = lump sum transfer, LIT = labour income tax
PRP = peak road pricing, FT = fuel tax, SPT = subsidy to public transport, LST = lump sum transfer, LIT = labour income tax
The percentage change in equivalent income caused by the individual policy instruments (model with externalities) When the instruments are combined in a revenue-preserving way, this results in the
The percentage change in equivalent income caused by the individual policy instruments (model with externalities) When the instruments are combined in a revenue-preserving way, this results in the
A negative value corresponds with a reduction in inequality The marginal impact on inequality — model with externalities (¢= 0.5) (% change in the Atkinson-Kolm index of inequality w.r.t. the benchmark)
A negative value corresponds with a reduction in inequality The marginal impact on inequality — model with externalities (¢= 0.5) (% change in the Atkinson-Kolm index of inequality w.r.t. the benchmark)

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Related topics

  • Tax reform
  • Transport policy
  • Road Pricing
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