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Healty Climate, Healthy Bodies -- Optimal Fuel Taxation and Physical Activity

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  • van den Bijgaart, Inge
  • Klenert, David
  • Mattauch, Linus
  • Sulikova, Simona

Abstract

Passenger transport has significant externalities, including carbon emissions and air pollution. Public health research has identified additional social gains from active travel, due to the health benefits of physical exercise. Per mile, these benefits greatly exceed the external costs from car use. We introduce active travel into an optimal fuel taxation model and characterize analytically the second‐best optimal fuel tax. We find that accounting for active travel benefits increases the optimal fuel tax by 44% in the USA and 38% in the UK. Fuel taxes should be implemented jointly with other policies aimed at increasing the uptake of active travel.
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  • van den Bijgaart, Inge & Klenert, David & Mattauch, Linus & Sulikova, Simona, 2022. "Healty Climate, Healthy Bodies -- Optimal Fuel Taxation and Physical Activity," VfS Annual Conference 2022 (Basel): Big Data in Economics 264062, Verein für Socialpolitik / German Economic Association.
    • Handle: RePEc:zbw:vfsc22:264062
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    3. Lassi Ahlvik & Anna Sahari, 2023. "Promoting active transport through health information: evidence from a randomized controlled trial," Working Papers 16, Finnish Centre of Excellence in Tax Systems Research.
    4. Funke, Franziska & Mattauch, Linus & van den Bijgaart, Inge & Godfray, Charles & Hepburn, Cameron & Klenert, David & Springmann, Marco & Treich, Nicholas, 2021. "Is Meat Too Cheap? Towards Optimal Meat Taxation," INET Oxford Working Papers 2021-08, Institute for New Economic Thinking at the Oxford Martin School, University of Oxford.

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    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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