Should Diesel Cars in Europe Be Discouraged?

32 Pages Posted: 14 May 2001

See all articles by Stef Proost

Stef Proost

KU Leuven - Department of Economics

Inge Mayeres

KU Leuven - Department of Economics

Date Written: January 2001

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.

Keywords: Transport policies, transport externalities, optimal taxation, marginal tax, reform, gasoline and diesel, applied general equilibrium model

JEL Classification: H2, H21, H23, R41, D58

Suggested Citation

Proost, Stef V. and Mayeres, Inge, Should Diesel Cars in Europe Be Discouraged? (January 2001). Available at SSRN: https://ssrn.com/abstract=268488 or http://dx.doi.org/10.2139/ssrn.268488

Stef V. Proost (Contact Author)

KU Leuven - Department of Economics ( email )

Leuven, B-3000
Belgium
016 32 66 35 (Phone)
016 32 67 96 (Fax)

Inge Mayeres

KU Leuven - Department of Economics ( email )

Leuven, B-3000
Belgium
+32 16 32 66 35 (Phone)
+32 16 32 67 96 (Fax)

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