Fuel Taxes and the Poor

The Distributional Effects of Gasoline Taxation and Their Implications for Climate Policy

Thomas Sterner

• Publisher: RFF Press
• Year: 2012
• Print ISBN: 9781617260926
• eBook ISBN: 9781136521713
• Topic: Law
• Subtopic: Environmental Law
• Index: Law

Fuel Taxes and the Poor challenges the conventional wisdom that gasoline taxation, an important and much-debated instrument of climate policy, has a disproportionately detrimental effect on poor people. Increased fuel taxes carry the potential to mitigate carbon emissions, reduce congestion, and improve local urban environment. As such, higher gasoline taxes could prove to be a fundamental part of any climate action plan. However, they have been resisted by powerful lobbies that have persuaded people that increased fuel taxation would be regressive. Reporting on examples of over two dozen countries, this book sets out to empirically investigate this claim.

The authors conclude that while there may be some slight regressivity in some high-income countries, as a general rule, fuel taxation is a progressive policy particularly in low income countries. Rich countries can correct for regressivity by cutting back on other taxes that adversely affect poor people, or by spending more money on services for the poor. Meanwhile, in low-income countries, poor people spend a very small share of their money on fuel for transport. Some costs from fuel taxes may be passed on to poor people through more expensive public transportation and food transport. Nevertheless, in general the authors find that gasoline taxes become more progressive as the income of the country in question decreases.

This book provides strong arguments for the proponents of environmental taxation. It has immediate policy implications at the intersection of multiple subject areas, including transportation, environmental regulation, development studies, and climate change.

Published with Environment for Development initiative.

Table of contents

• Cover
• Halftitle
• Title
• Copyright
• Contents
• Foreword
• Preface
• 1. Introduction: Fuel Taxes, Climate, and Tax Incidence
• 2. The Consumer Burden of a Carbon Tax on Gasoline
• 3. Distributional and Efficiency Impacts of Increased U.S. Gasoline Taxes*
• 4. Estimates from a Consumer Demand System: Implications for the Incidence of Environmental Taxes*
• 5. Fuel Tax Incidence in Costa Rica: Gasoline versus Diesel
• 6. The Income Distribution Effects of Fuel Taxation in Mexico
• 7. Is Fuel Taxation Progressive or Regressive in China?
• 8. Are Fuel Taxes in India Regressive?
• 9. Is Reducing Subsidies on Vehicle Fuel Equitable? A Lesson from Indonesian Reform Experience
• 10. Distributional Consequences of Transport Fuel Taxes in Ethiopia
• 11. Political Petrol Pricing: The Distributional Impact of Ghana’s Fuel Subsidies
• 12. Distributional Effects of Transport Fuel Taxes in Kenya: Case of Nairobi
• 13. Assessing the Impact of Oil Price Changes on Income Distribution in Mali: An Input-Output Approach
• 14. An Analysis of the Efficacy of Fuel Taxation for Pollution Control in South Africa
• 15. Fuel Taxation and Income Distribution In Tanzania
• 16. Distributional Effects in Europe
• 17. Who Pays Taxes on Fuels and Public Transport Services in the Czech Republic? Ex Post and Ex Ante Measurement
• 18. Distributional Effect of Reducing Transport Fuel Subsidies in Iran
• 19. Conclusions
• References
• Index