Is Pay-As-You-Drive Insurance a Better Way to Reduce Gasoline than Gasoline Taxes?
نویسنده
چکیده
Gasoline taxes are widely perceived as the most efficient instrument for reducing gasoline consumption because they exploit all behavioral responses for reducing fuel use, including reduced driving and improved fuel economy. At present, however, higher fuel taxes are viewed as a political nonstarter. Pay-as-you-drive (PAYD) auto insurance, which involves replacing existing lump-sum premiums with premiums that vary in proportion to miles driven, should be more practical, since they do not raise driving costs for the average motorist. We show that when impacts on a broad range of motor vehicle externalities are considered, PAYD also induces significantly higher welfare gains than comparable gasoline tax increases, for fuel reductions below 9%. The reason is that under PAYD, all of the reduction in fuel use, rather than just a fraction, comes from reduced driving; this produces a substantial additional efficiency gain because mileage-related external costs (especially congestion and accidents) are relatively large in magnitude.
منابع مشابه
Consumer Incentives to Reduce Greenhouse Gas Emissions from Personal Automobiles
The focus of this paper is short-term policy options to address greenhouse gas emissions from personal automobiles. Primary policies considered include gasoline taxes, carbon taxes, a carbon cap-andtrade program, cost-shifting initiatives, and a pay-at-thepump auto insurance scheme are examined closely. Pay-at-the-pump auto insurance is recommended on the basis of cost effectiveness, equity, pu...
متن کاملGreen taxes and double dividends in a dynamic economy
This paper examines a revenue neutral green tax reform along the lines of the Double Dividend hypothesis. Using a dynamic general equilibrium model calibrated to the US economy, we find that increasing gasoline taxes and using the revenue to reduce capital income taxes does indeed deliver both types of welfare gains: from higher consumption of market goods ( an efficiency dividend), and from a ...
متن کاملRoad fuel taxes in Europe: Do they internalize road transport externalities?
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 runn...
متن کاملRAND ReseARch AReAs ChiLDREN AND FAMiLiES EDUCAtiON AND thE ARtS ENERgy AND ENviRONMENt hEALth AND hEALth CARE iNFRAStRUCtURE AND tRANSPORtAtiON iNtERNAtiONAL AFFAiRS LAW AND BUSiNESS NAtiONAL SECURity POPULAtiON AND AgiNg PUBLiC SAFEty SCiENCE AND tEChNOLOgy tERRORiSM AND hOMELAND SECURity
F or nearly a century, federal and state gasoline and diesel taxes have provided the main source of revenue for funding the nation’s road network. But such taxes—typically levied on a cents-per-gallon basis—must be raised periodically to keep pace with inflation and improved fuel economy. With the rise in antitax sentiment over the past several decades, elected officials have grown increasingly...
متن کاملGasoline Taxes and Consumer Behavior
Gasoline taxes can correct externalities associated with automobile use, reduce dependency on foreign oil, and raise government revenue. Our understanding of the optimal gasoline tax and the efficacy of existing taxes is largely based on empirical analysis of consumer responses to gasoline price changes. In this paper, we directly examine how gasoline taxes affect consumer behavior as distinct ...
متن کامل