Working Paper: NBER ID: w16466
Authors: James Sallee
Abstract: Policy-makers have instituted a variety of fuel economy tax policies -- polices that tax or subsidize new vehicle purchases on the basis of fuel economy performance -- in the hopes of improving fleet fuel economy and reducing gasoline consumption. This article reviews existing policies and concludes that while they do work to improve vehicle fuel economy, the same goals could be achieved at a lower cost to society if policy-makers instead directly taxed fuel. Fuel economy taxation, as it is currently practiced, invites several forms of gaming that could be eliminated by policy changes. Thus, even if policy-makers prefer fuel economy taxation over fuel taxes for reasons other than efficiency, there are still potential efficiency gains from reform.
Keywords: No keywords provided
JEL Codes: H23
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Fuel economy taxation (H29) | vehicle fuel economy (R48) |
| Fuel economy taxation (H29) | gasoline consumption (L91) |
| Fuel economy taxation (H29) | market share of fuel-efficient vehicles (Q35) |
| increased fuel efficiency (Q41) | gasoline savings (R48) |
| fuel economy taxation policies (R48) | gaming of tax structure (H26) |
| interaction between fuel economy taxation and CAFE standards (H29) | overall fleet fuel economy (L92) |