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Equity and transport policy reform

Author

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  • Inge Mayeres

    (K.U.Leuven, C.E.S., Energy, Transport and Environment)

Abstract

The paper assesses the marginal welfare and equity impacts of three transport instruments in the presence of three transport externalities: congestion, air pollution and accidents. It considers 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 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.

Suggested Citation

  • Inge Mayeres, 2001. "Equity and transport policy reform," Energy, Transport and Environment Working Papers Series ete0114, KU Leuven, Department of Economics - Research Group Energy, Transport and Environment.
    • Handle: RePEc:ete:etewps:ete0114
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    File URL: https://lirias.kuleuven.be/bitstream/123456789/119760/1/ete-wp01-14.pdf
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    Citations

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    Cited by:

    1. Safirova, Elena & Gillingham, Kenneth & Parry, Ian & Nelson, Peter & Harrington, Winston & Mason, David, 2004. "8. Welfare And Distributional Effects Of Road Pricing Schemes For Metropolitan Washington Dc," Research in Transportation Economics, Elsevier, vol. 9(1), pages 179-206, January.
    2. Parry, Ian W.H. & Sigman, Hilary & Walls, Margaret & Williams, Roberton C., III, 2005. "The Incidence of Pollution Control Policies," Discussion Papers 10651, Resources for the Future.
    3. Parry, Ian W. H., 2004. "Are emissions permits regressive?," Journal of Environmental Economics and Management, Elsevier, vol. 47(2), pages 364-387, March.
    4. Charlotte Berg, 2007. "Household Transport Demand in a CGE-framework," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 37(3), pages 573-597, July.
    5. Inge Mayeres & Stef Proost, 2004. "Towards better transport pricing and taxation in Belgium," Reflets et perspectives de la vie économique, De Boeck Université, vol. 0(4), pages 23-43.

    More about this item

    Keywords

    transport; externalities; tax reform; equity; applied general equilibrium;
    All these keywords.

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models

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