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Reform of the motor-vehicle tax for more environmental and economic compatibility?

Wolfgang Ströbele, Thomas Puls
ifo Institut für Wirtschaftsforschung, München, 2007

ifo Schnelldienst, 2007, 60, Nr. 06, 03-09

The discussion of climate-policy goals has produced various proposals for decreasing CO2 emissions in the traffic sector, among others the introduction of a motor-vehicle tax based on the amount of pollutant output. In the opinion of Wolfgang Ströbele, University of Münster, "It is time to also consider traffic as a major polluter". For him, however, instead of "the administratively expensive motor-vehicle tax, in the long term an electronically registered car toll, which would finance streets and highways" would be a better solution. "Such a system would correctly position charges and incentives, would not have a high, lump-sum fixed cost for those who drive little in older vehicles and could be designed in a revenue-neutral fashion." For Thomas Puls, Institut der deutschen Wirtschaft (IW) in Cologne, a CO2-oriented motor vehicle tax could be an economically suitable instrument for further lowering CO2 output in traffic. It would be desirable, however, "if a carbon-dioxide based taxation were introduced throughout Europe. Up to now there has been a patchwork in EU. In the interest of a harmonisation of the European single market, an initiative from Brussels would be welcome." Also in terms of the alternations to the motor vehicle tax currently under discussion, i.e. transferring it to the mineral oil tax, the CO2 based tax is the economically and ecologically more advantageous variant.

JEL Classification: H200,Q200,R400

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ifo Institut für Wirtschaftsforschung, München, 2007