Spatial graduation of fuel taxes; Consequences for cross-border and domestic fuelling

D.J. van Vuuren, P. Rietveld, F.R. Bruinsma

Research output: Contribution to JournalArticleAcademic

Abstract

Substantial differences exist among fuel taxes between various countries. These differences represent a form of fiscal competition that has undesirable side effects because it leads to cross-border fuelling and hence to extra kilometers driven. One possible way of dealing with this problem of low fuel taxes in neighbouring coountries is to introduce a spatial differentiation of taxes: low near the border and higher farther away. This paper contains an empirical analysis of the consequences of such a spatial graduation of fuel taxes for the Netherlands. Impacts of fuelling behaviour, vehicle kilometers driven, tax receipts, and sales by owners of gas stations are analysed. The appropriate slope of the graduation curve in order to prevent fuel-fetching trips is also discussed. Our conclusion is that in a small country such as The Netherlands, a spatial graduation of fuel taxes will lead to considerable problems, even when the graduation curve is not steep that fuel-fetching trips are prevented. The reasonis that - given their activity patterns - car drivers will change the location of their fuelling activity leading to substantial problems for owners of gas stations in areas with high taxes.
Original languageEnglish
Pages (from-to)433-457
Number of pages24
JournalTransportation Research. Part A: Policy & Practice
Volume35
Issue number5
DOIs
Publication statusPublished - 2001

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