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 considered 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 used 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 we considered is a further differentiation of the existing road pricing scheme for heavy duty vehicles. A total of 5 scenarios were set up.
  • The calculation of the direct effects of the scenarios. This included estimating the consequences for traffic volumes, including congestion, and the environmental effects, using traffic and transport models. 2 scenarios were retained for further consideration.
  • The indirect effects of these scenarios were considered for 4 revenue recycling scenarios (for a total of 8). We differentiated 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 considered include GDP, employment rates and trade balance. Again, 2 scenarios were retained after this step.
  • We performed a full SCBA for these 2 scenarios, and supported this with a qualitative review of aspects that cannot be captured properly by the SCBA. A number of considerations were added with regard to the public transport and mobility budget.

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

reports

https://www.lne.be/studie-groene-tasxhift of hier: groene-taxshift.pdf

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