Shifting from Labour Taxation to Road Pricing

Effects of potential scenarios for greener fiscal policy, more specifically through road pricing for passenger cars

The Flemish Government aims to make its fiscal policy greener. In this study for the Department LNE, TML considers the effects in terms of environment, economy and social distribution of an introduction of road pricing for passenger cars (possibly extending to greening existing fiscal motoring taxes), combined with a lowering of labour or income tax. All options considered are revenue neutral.

We will use a four step approach:

  • Setting up modal scenarios for the road pricing scheme. Tariffs can be differentiated in terms of time, place, road type and vehicle environmental characteristics. Another option to be considered is a further differentiation of the existing road pricing scheme for heavy duty vehicles. A total of 5 scenarios will be set up.
  • The calculation of the direct effects of the scenarios. This includes estimating the consequences for traffic volumes, including congestion, and the environmental effects, using traffic and transport models. 2 scenarios will be retained for further consideration.
  • The indirect effects of these scenarios will be considered for 4 revenue recycling scenarios (for a total of 8). We will differentiate these based on the instrument (general income tax or social security contributions for employers) and on whether or not lower incomes will receive preferential treatment. Indirect effects to be considered include GDP, employment rates and trade balance. Again, 2 scenarios will be retained after this step.
  • We will perform a full SCBA for these 2 scenarios, and support this with a qualitative review of aspects that cannot be captured properly by the SCBA. A number of considerations will be added with regard to the public transport and mobility budget.

This study is performed in cooperation with the KU Leuven, who will contribute to the assessment of indirect effects.

reports

not available yet

period

2016-2017

funded by

Vlaamse Overheid: Departement Leefmilieu, Natuur en Energie

researchers

Tim Breemersch, Eef Delhaye, Christophe Heyndrickx, Rodric Frederix

contact

Tim Breemersch

+32 16 74.51.23
reference: 15092