‘Green’ fiscal measures for lessening the environmental impact of private vehicle ownership – a review

Abstract

Given the increasing concerns surrounding climate change, the paper focuses upon the transport sector and the use of taxation policy to help curb rising amounts of carbon dioxide (CO2) emissions. Through various environmental reforms, Governments can send out ‘pricing signals’ to consumers in which to shape vehicle purchasing behaviour towards lower emission vehicles. The paper provides a review of taxation measures which can be implemented during three stages of the vehicle ownership cycle: at time of purchase, annually/biannually during the lifetime and through a charge on usage. Through an overview of strengths and weaknesses, including examples around Europe, the paper attempts to shed light upon the optimal combination of measures for the greatest emission abatement, which appears to lie in a combination of purchase and circulation taxes. However, there does not seem to be a one-size-fits-all solution, as different counties each have their own geographical, social, industrial and political considerations unique to their situation. The paper also considers the context of vehicle taxation amongst other factors in the vehicle purchasing decision, and gives attention to other situational factors and those more psychological in nature. The psychological aspects of taxation is identified as an area for further research, and details of a current research project is provided which aims to address this research gap.