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Should diesel cars in Europe be discouraged?

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  • Inge Mayeres
  • Stef Proost

Abstract

This paper examines the rationale for the different tax treatment of gasoline and diesel cars currently observed in Europe. First, we analyse possible justifications for a different tax treatment: pure tax revenue considerations, externality considerations and constraints on the tax instruments used for cars and trucks. Next, an applied general equilibrium model is used to assess the welfare effects of revenue neutral changes in the vehicle and fuel taxes on diesel and gasoline cars. The model integrates the effects on tax revenue, environmental externalities, road congestion, accidents and income distribution.

Suggested Citation

  • Inge Mayeres & Stef Proost, 2000. "Should diesel cars in Europe be discouraged?," Working Papers of Department of Economics, Leuven 544244, KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven.
    • Handle: RePEc:ete:ceswps:544244
    Note: paper number ETE WP 2000-05
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    File URL: https://lirias.kuleuven.be/retrieve/392846
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