The impact of emissions-based taxes on the retirement of used and inefficient vehicles: The case of Switzerland

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractMany countries have adopted policies designed to reduce CO 2 emissions from road vehicles. Taxes linked to the CO 2 emissions rate or the fuel economy of a vehicle (which is inversely related to its CO 2 emissions rate) are examples of such policies. These taxes are usually imposed on new vehicles, and previous evaluations have estimated the increases in the shares or sales of new and fuel-efficient vehicles associated with such taxes. In contrast, we ask whether taxes on new cars that penalize high emitters induce changes in the retirement of used and inefficient vehicles. We exploit natural experiment conditions in Switzerland to analyze the impact of two different "bonus"/"malus" schemes implemented at the cantonal level. In both schemes, the bonus rewards new efficient vehicles. The malus is retroactive in canton Obwalden, in the sense that it is charged on both new and existing high-emitting cars, but it is only applied prospectively to new cars in Geneva. We use a difference-in-difference design within a survival analysis setting. We find that a bonus/malus accelerates the retirement of existing high-emitting vehicles in Obwalden, shortening the expected lifetime of the three most popular make-models by 7 to 11 months. The effect is the opposite in Geneva, where we estimate that the expected lifetime of these three popular models is extended by 5 to 8 months. These findings have important implications about the desirability of bonus/malus schemes and on their design, as well as on old car scrappage programs.

Efficient Combination of Taxes on Fuel and Vehicles

“…The emission reduction of such taxation is eroded as sales of new vehicles expand, however (Alberini and Bareit, 2017), and as the retirement of high-emitting vehicles is postponed (Alberini et al, 2018). The annual CO2-based registration tax, levied on both new and existing vehicles, is not burdened by these undesirable impacts according to Alberini et al (2018). The impact of these annual taxes on the average emission rates of new vehicles is modest, however, (Klier and Linn, 2015), and the cost per ton of reduced CO2 emissions is substantial (Alberini and Bareit, 2017).…”

The Relationship between Road Tax Rate Reduction Depending on Vehicle Age and Emission Parameters of Taxed Vehicle Categories in the Czech Republic

“…This finding testifies to a large variety of results in the case of applying different variables during the process of identifying the potentially risky segments of the fleet. The methodological procedures and applied data similarly lead to largely varying conclusions and recommendations; for examples refer to Kim, Han and Moon (2011), Marriot and Mortimore (2017) and Rasool, Zaidi and Zafar (2019) versus Alberini et al (2018), Klier and Linn (2015) and Scrimgeour, Oxley and Fatai (2005).…”

“…The disadvantages of the tax are seen by Bjertnaes (2019) in the manufacturers' tendency to cheat in measuring and declaring this indicator, by David (2012; in substituting citizens' education and information with mere financial pressure, by Carling et al (2017) in the reduction of CO 2 emissions due to a slower transition to e-tailing, by Alberini et al (2018) in the reduction of emission benefits by postponing the purchase of a vehicle, and by Scrimgeour, Oxley and Fatai (2005) in the decrease of the gross domestic product and household consumption and welfare. Neither Klier and Linn (2015) nor Alberini and Bareit (2017) support this tax.…”

Are environmental tax policies beneficial?

“…Specifically, all of these points apply to research on a feebate programme in the Canadian province of Ontario (Rivers and Schaufele, 2017 [14]) and a study on Swiss annual circulation taxes that are linked to vehicle CO2 emissions (Alberini and Bareit, 2017 [15]). A study of Japan's feebate policy estimates producer surplus effects (Konishi and Zhao, 2017 [16]), but does not directly provide the other information that would be needed for a CBA.…”

“…14 This paper assumes that local air pollution of the 2008 cohort is identical to the 2008 fleet average. Nonclimate effects are thus limited to the ones resulting from feebate-induced additional road use 15. Using averages is attractive for the purpose of this methodological exercise as it makes the analysis more tractable.…”