TY  - JOUR
AU  - Sallee, James
TI  - The Taxation of Fuel Economy
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 16466
PY  - 2010
Y2  - October 2010
DO  - 10.3386/w16466
UR  - http://www.nber.org/papers/w16466
L1  - http://www.nber.org/papers/w16466.pdf
N1  - Author contact info:
James M. Sallee
Department of Agricultural and Resource Economics
University of California, Berkeley
207 Giannini Hall
Berkeley, California 94720-3310
Tel: 510-643-5519
Fax: 510-643-8911
E-Mail: sallee@berkeley.edu
M1  - published as James M. Sallee. "The Taxation of Fuel Economy," in Jeffrey Brown, editor, "Tax Policy and the Economy, Volume 25" University of Chicago Press (2011)

AB  - 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.
ER  -