Redistributive and welfare impacts of a change in the French fuel tax on motor fuels[Effets redistributifs et allocatifs d'une modification de la TIPP sur les carburants automobiles]

Among the various taxes aimed at providing the treasury with revenue, the French TIPP (Taxe intérieure sur les produits pétroliers or Oil Product Domestic Tax) on motor fuels is one of the most regressive. Indeed, to pay the tax, poorer households spend a greater share of their income than richer households do. As a policy instrument for reducing the negative impacts of automobile use, increasing the rate of the TIPP is inefficient as such reductions are obtained at an excessive economic cost. This paper will provide an assessment of this cost. Ideally, it would be possible to compare this cost to the benefit in terms of diminished negative impacts. However, the monetarization of this benefit raises insuperable methodological and ethical problems. For the purposes of this paper, it is sufficient to relate the economic cost of an increase in the TIPP to a physical measurement of the reduction in the negative impacts obtained. This provides a yardstick to compare different policy instruments for combating the negative impacts of the private car. The TIPP seems probably to be the worst of these instruments.