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In 2018, California voters rejected Proposition 6, a ballot initiative that sought to repeal state gasoline taxes and vehicle fees enacted as part of the 2017 Road Repair and Accountability Act. This paper examines the relationship between support for the proposition, political ideology and the economic burdens imposed by the Act. For every hundred dollars of annual per-household costs imposed by the Road Repair and Accountability Act, support for proposition rose by 3–5 percentage points, roughly comparable to a commensurate increase in the share of ”liberal” voters. Notably, the relationship between voting and the economic burden of the policy is seven times strong in the most conservative tracts relative to the most liberal tracts. This heterogeneity has important implications for the popular support for environmental taxes, as conservative areas in California and elsewhere tend to bear a higher burden from transportation and energy taxes than liberal areas.View the NCST Project Webpage

Fuel taxes are seen as an important instrument in the fight against climate change, including in the European Green Deal. From a social-ecological policy perspective, it is important to understand current high levels of public opposition to fuel taxes. If social disadvantage is an important driver of opposition, this would strengthen arguments that fuel taxes need to be designed in a fairer way. However, it remains unclear how important social disadvantage – here defined as a combination of low income, fuel poverty risk, low education, low occupational status and job insecurity – is for explaining opposition compared to factors such as political trust and climate change attitudes, and how the role of social disadvantage varies with welfare regimes in Europe. In this article, we examine how strongly social disadvantage is associated with opposition to fuel taxes once political trust and climate change attitudes are controlled for, and we compare results across welfare regimes. The article uses data from the 2016 European Social Survey and employs logistic regression and decomposition analysis. We find that social disadvantage contributes nearly as much to fuel tax opposition as climate change attitudes and political trust together, with 10.9 and 16.6 percentage points respectively. However, the role of social disadvantage varies by welfare regime. It matters most in Southern and Eastern Europe, where opposition is particularly high, as are poverty and inequality. We discuss implications for social-ecological policy strategies that aim to increase public acceptability of fuel taxes in Europe. [ABSTRACT FROM AUTHOR]

The transport sector is responsible for around 20% of global CO2 emissions, and road transport alone contributes to three-quarters of that share. A separate Emissions Trading System (ETS) in the EU will be implemented in 2027, covering road transport, buildings and additional sectors (mainly small industry). The likely outcomes of such policy are higher fuel prices, leading to less fuel consumption and reduced road transport emissions. Given that the inclusion of road transport in the EU ETS was originally proposed by the UK in the 2000s, and that the UK is exploring possible improvements to its own UK ETS, it is not impossible that the idea of emissions trading in road transport could be revisited in the UK. This article explores differences in perceptions of fuel price increases as a result of an increase in fuel duties or as a result of the introduction of a parallel ETS for road transport. This research employs a Serious Game to elicit perceptions. The game was designed to create situations where car drivers would need to make decisions in response to an increase in the pump price of fuel. Ultimately, the idea was to get the study participants to reflect on their travel decisions both in the game and in real life. Possible responses included changing their cars, modifying their travel behaviour and moving house. The data was analyzed using an interpretive approach, which contributed to the understanding of how participants experience and rationalize their decisions after fuel price increases. The main finding is that emissions trading seems to be seen more positively than an increase in fuel duties. The study participants associated emissions trading with a reduction in GHG emissions, and fuel duty increases to an increase in pump prices. When they were reminded that emissions trading would also cause pump prices to increase, they still seemed to be open to the idea of such a policy, and when they were reminded that the increase in fuel duties would also be aimed at reducing GHG emissions, they changed their attitude slightly towards a more positive one. [ABSTRACT FROM AUTHOR]

Fossil fuels remain undertaxed worldwide despite the accelerating threat of climate change. While subscribing to the existing literature on that domestic politics matters, I contend that policy diffusion is yet another mechanism here: risk-averse policy makers carefully follow their counterparts abroad, so incrementalism in taxing fossil fuels is self-perpetuating transnationally. Using data from 29 OECD countries, 1990–2019, various spatial econometric analyses lend support to my argument: the excise tax on gasoline in one country positively correlates to that in other countries, with this interdependence being more pronounced between geographic or linguistic “neighbors” and trade or political partners. Substantively, a gasoline tax cut by one unit in a single country could spread over 60% of its negative effect elsewhere. This Letter concludes with its contribution to the literature, possible avenues for future research, as well as important policy implications. [ABSTRACT FROM AUTHOR]

State and federal governments rely on fuel taxes to help build and maintain roads, bridges, and other transportation infrastructure. The federal gasoline tax has not been increased since 1993 and inflation, improvements in fuel efficiency, and an increasing share of electric vehicles on the road have created a revenue shortfall from fuel taxes in the Highway Trust Fund.Many states have begun conducting pilot programs for a road user charge, or mileage-based user fee, which would impose a fee per mile for drivers rather than a charge per gallon of fuel. Benefits of this system are that it is not sensitive to changes in drivetrain technology to electric vehicles, can be designed to be less regressive than a gasoline tax, and can be easily adjusted for inflation. However, implementing a new tax would have challenges. This policy brief summarizes findings and policy implications from University of California, Davis research that assessed the administration of the gasoline tax, including collection and distribution of revenues, to determine what barriers and opportunities might exist for a road user charge funding mechanism.View the NCST Project Webpage

The gasoline tax is one of the primary sources of revenue for transportation infrastructure funding. However, recent revenue shortfalls due to a combination of inflation, fuel efficiency improvements, and vehicle electrification have led to discussions of alternative funding mechanisms such as the road user charge where drivers would pay fees by miles driven rather than gallons consumed. In this report, researchers investigate the institutional structure of the current gasoline tax at the federal level including historical changes, how the tax is collected, and how it is allocated and disbursed to fund infrastructure projects. In outlining the structure of the current gasoline tax, they identify key opportunities for a road user charge to be integrated into the current funding system. These include considerations for tax evasion, simplification of state level allocated disbursement formulas, re-allocation of funds, and designating spending for fuel-specific infrastructure.View the NCST Project Webpage

Pricing externalities from vehicle use such as road damage, vehicular emissions (both greenhouse gases and local pollutants), and congestion has become an important topic in the transportation sector in recent years. Road user charge pilot programs are being explored in various states in the U.S.; cities like New York and San Francisco are following in the footsteps of Stockholm and London by announcing plans to implement congestion pricing; and numerous cities and countries have announced gasoline vehicle phase-outs or bans. In this study, we provide an overview of the academic literature related to vehicle pricing, we examine case studies of locations where pricing has been implemented, and we investigate the design choices for programs that would address each of three major externalities related to vehicle use: road damage, emissions (both greenhouse gases and local pollutants), and congestion. Our analysis finds opportunities for integrating technology across multiple pricing programs—by relying on overlapping systems, programs can be implemented more efficiently and provide tremendous cost savings.View the NCST Project Webpage

After the Road Repair and Accountability Actof 2017 (Senate Bill 1) was passed, transportation revenue funding in California was bolstered by numerous fees including gasoline and diesel taxes, as well as an annual registration fee exclusively for zero-emission vehicles(ZEVs). We assess theability of the ZEV registration fee to provide adequate funding in the future, how the registration fees affect the sales of ZEVs in California, and alternative funding mechanisms instead of the registration fee. We find that the registration fee is not a sustainable mechanism to provide adequate funding as California transitions towards ZEVs. Additionally, the fee detracts from the market adoption of ZEV technologies by as much as a 20% decrease in new ZEV sales. Lastly, we examine alternative funding mechanismsinclude a fuel tax for hydrogen and electricity, as well as a road user charge (RUC). We find that a ZEV exclusive RUC is the mostpromising alternative to the ZEV registration fee.

California has established itself as a leader in efforts to reduce greenhouse gas (GHG) emissions from transportation. At the same time, the state has not reflected its ambitious policies for GHG reduction and climate action in its practices for allocating state transportation funding. This white paper reviews the complex systems through which California generates and allocates state revenue for transportation investment. It finds that the state’s framework for funding transportation is disconnected from its climate goals. The paper also suggests preliminary steps for revising this framework to reinforce GHG reduction goals. Such recommendations are particularly salient given the state’s recently completed study of road user charges as an alternative transportation revenue source. Implementation of road charges – or any other new or revised transportation revenue source – would need to address the disposition of revenues generated. The paper argues that California should use any such opportunity to align the distribution of state transportation dollars with its climate objectives, not fall back on status quo allocation practices.View the NCST Project Webpage

External costs of freight trucks include air pollution, highway damage, and congestion. While diesel taxes reduce both the pollution and congestion externalities, we show that they worsen highway damage. We investigate the impact of fuel prices on cargo shipments using weight-in-motion data from New York and California. We obtained sensor readings on over 1.4 billion vehicle events. These data allow us to track daily changes in the weight and number of trucks at specific locations. We explain the average daily weight differential between New York and California as a function of the diesel price differential using unexpected weather as an instrument. We find that when fuel prices increase 10 percent, fuel use by heavy trucks declines 3.1 percent and average truck weight increases 3.2 percent. While total truck traffic decreases by around 1 percent, on net there is 19.6 percent more road damage. The dispatch effect changes the welfare comparison of using fuel taxes versus efficiency standards to control carbon emissions. WE find that a reduction in per-mile shipping cost from the standard causes freight to be reallocated across more trucks so that schedules are enhanced—that is, the rebound occurs on both a quality and a quantity dimension. In consequence, road damage declines. While there is considerable uncertainty about the cost of external congestion and safety of trucks, we find that fuel efficiency standards dominate fuel taxes as a policy to reduce carbon emissions for a wide range of parameter estimates.

A number of proposals in the past year have sought to address aspects of securing or reforming state and federal transportation funding. This white paper assembles the most prominent of these proposals and reviews them in the context of sustainable transportation: funding sustainability, environmental sustainability, and social justice. Funding recommendations include a one-time use of corporate taxes to allow states to reduce the backlog of maintenance needs. The federal gas tax would be continued and indexed to inflation. Greenhouse gas (GHG) reduction targets would be set for each state and states would be allowed to ‘buy down’ their gas tax as they reduce their GHG emissions. States would be given pricing and tolling authority and have the authority to implement a vehicle miles traveled (VMT) tax. States would also assume responsibility for all roads. Taken together, these strategies would set transportation on the path toward sustainability.View the NCST Project Webpage

Many European countries have adopted carbon dioxide–based (CO2-based) vehicle taxes to help reduce transportation sector emissions. The literature has shown that these policies reduce CO2 emissions but has not considered whether they affect emissions that harm local air quality. This paper analyzes whether CO2-based taxes have an unintended consequence of raising emissions of nitrogen oxides (NOx) and particulates, which harm local air quality. Using highly detailed data on European new vehicle registrations from 2002 through 2010, I estimate the effects of fuel costs and vehicle taxes on consumer vehicle choices. The CO2-based vehicle taxes reduce CO2 emissions but increase NOx and particulates emissions. The environmental harms from the NOx and particulates emissions roughly offset the benefits of the lower CO2 emissions. Because of the estimated substitution patterns, fuel-based CO2 taxes introduce milder trade-offs than do vehicle taxes. [ABSTRACT FROM AUTHOR]

To what extent have national fiscal policies contributed to the decarbonisation of newly sold passenger cars? We construct a simple model that generates predictions regarding the effect of fiscal policies on average $$\hbox {CO}_{2}$$ emissions of new cars, and then test the model empirically. Our empirical strategy combines a diverse series of data. First, we use a large database of vehicle-specific taxes in 15 EU countries over 2001-2010 to construct a measure for the vehicle registration and annual road tax levels, and separately, for the $$\hbox {CO}_{2}$$ sensitivity of these taxes. We find that for many countries the fiscal policies have become more sensitive to $$\hbox {CO}_{2}$$ emissions of new cars. We then use these constructed measures to estimate the effect of fiscal policies on the $$\hbox {CO}_{2}$$ emissions of the new car fleet. The increased $$\hbox {CO}_{2}$$ -sensitivity of registration taxes have reduced the $$\hbox {CO}_{2}$$ emission intensity of the average new car by 1.3 %, partly through an induced increase of the share of diesel-fuelled cars by 6.5 percentage points. Higher fuel taxes lead to the purchase of more fuel efficient cars, but higher diesel fuel taxes also decrease the share of (more fuel efficient) diesel cars; higher annual road taxes have no or an adverse effect. [ABSTRACT FROM AUTHOR]

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All countries in Europe have road fuel taxes and these account for roughly half of the net fuel price. We compare current road fuel taxes and corrective taxes, estimated on the basis of negative externalities from road transport for 22 European countries, taking into account the effect of fuel taxation on fuel efficiency. We focus on cars running on diesel or petrol and commercial vehicles running on diesel. If fuel taxes were intended to internalize all road transport externalities, then a number of countries could be considered to be on the right path already in what respects petrol taxation. Diesel, on the other hand, seems to be under-taxed in all 22 countries. Petrol tax increases would be in order in some countries and diesel tax increases would be in order in all 22 countries, at least as a bridge until fine-tuned policies, such as widespread peak congestion pricing or pay-as-you-drive insurance can be put in place. [ABSTRACT FROM AUTHOR]

A tax on fuel is one of the primary mechanisms for reducing truck transport externalities such as greenhouse gas emissions, road damage, congestion, and accidents. The economic efficiency properties of a fuel tax are examined for the farm-to-elevator grain trucking sector--a sector for which the road damage externality is often severe. Because trucking volumes cumulate more rapidly near the delivery points, marginal external cost is generally not proportional to distance. Further, noncompetitive FOB pricing by grain buyers implies that road tax discounts to offset price markups should be independent of location. In both cases, a fuel tax is not capable of efficiently addressing the externality. With discriminatory pricing by buyers, "cross-hauling" emerges and the optimal fuel tax is unexpectedly high because the buyer passes on only a portion of the tax to the farmer. In a simple example with discriminatory pricing, the optimal fuel tax reduces excess average trucking distance by less that 50%.

Fuel taxes, assessed on a per-gallon basis nationally, have been the major source of transportation funding for the past century. Despite increasing travel demand, aging infrastructure, and soaring construction, operation, and maintenance costs, federal tax rates have remained unchanged since 1993. This article assesses the financial impacts of the current per-gallon taxing regime and a variety of travel demand management strategies, utilizing mileage-based user fees (MBUFs) for the state of Florida. The results indicate that combining MBUFs with congestion pricing (CPMBUFs) can be a viable pricing and demand management strategy for enhancing Florida's transportation funding. [ABSTRACT FROM PUBLISHER]

Increasing concerns are noted over the current transportation funding system based on fuel taxes, but there has been little scholarly literature that evaluates the fuel tax system in a comprehensive manner. As a synthesis, this article reviews the background of fuel taxes designated for transportation and examines issues related to the fuel taxes with four tax-evaluation principles, including economic efficiency, social equity, revenue adequacy, and political and administrative feasibility. Although the analysis does not indicate an absolute denial of fuel taxes as a revenue source to support transportation, it shows that the current transportation funding system based on fuel taxes is no longer sustainable with the rapid erosion of fuel tax base. [ABSTRACT FROM PUBLISHER]

In the context of the abolition of traditional subsidies, this paper discusses the persistence of the major remaining subsidy scheme in Norwegian fisheries: exemption from fuel taxes. This reimbursement scheme stems from the late 1980s, and has persisted since then under different governments. This paper gives the background to this support against theoretical predictions of the subsidy׳s effects on fishing behaviour and profitability. For 2011, the estimated exempted fuel taxes for the fishing fleet was NOK 999.0 million, amounting to 6.3 per cent of the landed value, against NOK 772.7 million (6.4 per cent of landed value) in 2007. The Norwegian scheme is also discussed in relation to similar arrangements in other countries. The national fishing fleet is heterogeneous with respect to oil consumption in transport and fishing operations. Hence, the effect of the fuel subsidy is different for different fleet components. The implications of abolishing this subsidy for the fishing fleet in general and for different vessel groups, as well as its policy implications, are discussed. [ABSTRACT FROM AUTHOR]

Abstract: Several recent papers have documented an effect of fuel prices on new vehicle fuel economy in the United States. This paper estimates the effect of fuel prices on average new vehicle fuel economy for the eight largest European markets. The analysis spans the years 2002–2007 and uses detailed vehicle registration and specification data to control for policies, consumer preferences, and other potentially confounding factors. We find fuel prices to have a statistically significant effect on average new vehicle fuel economy in Europe. The effect estimated for Europe is much smaller than comparable estimates for the United States. [Copyright &y& Elsevier]

The most effective policy to address environmental externalities from vehicular fuel use is an appropriate fuel tax. Instead of raising fuel taxes, Canada's provincial and federal governments prefer to subsidize the purchase of fuel-efficient vehicles and the accelerated retirement of old vehicles. Are these programs effective? Can they be improved? We argue that subsidies for hybrids and electric vehicles are not cost-effective and instead recommend building on Canada's brief and modest experience with 'feebates.' While British Columbia's pioneering accelerated vehicle retirement program is cost-effective, its success rests significantly on inducing participants to switch from personal vehicles to alternative transportation modes. Policy refinements will be needed to adapt the lessons learnt from this program to less favourable conditions elsewhere in Canada. [ABSTRACT FROM AUTHOR]

Abstract: This article reviews and compares the results of four modelling case studies of urban road pricing implementation that were carried out for the MC-ICAM project. The studies all concern large cities in Western Europe (Paris, Brussels, Oslo and Helsinki) and they all examine phased implementation paths in which constraints on the set of policy instruments are progressively relaxed. However, the studies used different models that vary with respect to the endogenous dimensions of traveller behaviour, the level of detail in which road and public transit networks are represented, and assumptions about what policy instruments are available and what constraints apply. [Copyright &y& Elsevier]