Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/192410 
Year of Publication: 
2005
Series/Report no.: 
Discussion Papers No. 428
Publisher: 
Statistics Norway, Research Department, Oslo
Abstract: 
Indirect taxes on transportation activities that pollute can correct externalities and close the gaps between private and social costs. However, policy makers often find such Pigou taxes difficult to implement because of political resistance due to possibly adverse affects on equity. For this reason it is important to assess the distributional aspects of environmental levies. This article estimates properties of the demand for transportation in parametric and non-parametric analyses of Consumer Expenditure Surveys for the United States, 2000, and finds patterns in the resulting set of Engel curves. Private transportation using air flights and new automobiles have Engel elasticities above unity while public transportation via mass transit has Engel elasticity below unity. The findings can be interpreted in an important way since they show that a differentiated scheme of environmental taxes on transportation may function progressively. A Pigou scheme with larger taxes on modes of transportation that pollute more appears to coincide with larger levies on luxury modes preferred by richer households.
Subjects: 
consumption patterns
double dividend
Engel curves
environmental levies
equity
externality
indirect taxation
Pigou correction
redistribution
transportation
travel
JEL: 
D12
D31
H23
R41
Document Type: 
Working Paper

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