Can Taxes on Cars and on Gasoline Mimic an Unavailable Tax on Emissions
Abstract
An emissions tax is efficient, but measurement of every car’s emissions would be inaccurate and expensive. With identical consumers, we demonstrate the same efficiency for: an emissions tax; a gas tax that depends on fuel type, engine size, and pollution control equipment (PCE); a vehicle tax that depends on mileage; or a combination of uniform tax rates on gasoline and engine size with a subsidy to PCE. With heterogeneous consumers, efficiency can be obtained by a vehicle-specific gas tax or mileage-specific vehicle tax, but not by flat rates. We characterize second-best uniform tax rates on gasoline and on car characteristics.Suggested Citation
Don Fullerton and Sarah E. West. "Can Taxes on Cars and on Gasoline Mimic an Unavailable Tax on Emissions" Journal of Environmental Economics and Management 43 (2002): 135-157.
Available at: http://works.bepress.com/don_fullerton/17