Autonomous, Connected, Electric Shared Vehicles (ACES) and Public Finance: An Explorative Analysis

Abstract

This paper discusses the implications of autonomous-connected-electric-shared vehicles (ACES) for public finance, which have so far been widely ignored. In OECD countries, 5-12% of federal and up to 30% of local tax revenue are currently from fuel and vehicle taxation. The diffusion of ACES will likely reduce these important sources of government revenues, while also affecting transport-related government expenditures. We argue that the realization of socioeconomic benefits of ACES depends on the implementation of tailored public finance policies. In particular, the introduction of road tolls in line with ‘user pays’ and ‘polluter pays’ principles will become more attractive. Moreover, innovation in taxation schemes to fit the changing technological circumstances may alter the (relative) importance of levels of governance in transport policy making, likely shifting power towards local (in particular urban) governmental levels. We finally argue that due to path-dependencies, and the risk of lock-in effects in sub-optimal public finance regimes, further research and near-term policy action regarding ACES is required.