Comparison of social and perceived marginal costs of road transport in Italy

Abstract

The topic of external costs of transport is widely studied in the scientific literature and policy makers are showing a growing awareness on this problem. One of the main tools used to control the social costs of transport and reduce welfare losses associated to externalities is that of internalisation via tariffs: road pricing, carbon taxes, dedicated taxes etc. Actually, many taxes on transport already exist, but seldom have an explicit internalisation purpose. In this paper we compare current road transport perceived marginal costs in Italy with social ones. Starting from the literature on the topic, in the analytical part of the paper we present the case of Italy and quantify the current level of external costs and taxation. Then we compare unit taxes with marginal transport social costs, with particular respect to different driving contexts. Results show that gasoline passengers cars always perceive the external costs they generate more than any other vehicle category. In urban contexts external costs are still not rightly perceived, with the exception of recent gasoline cars only and excluding congestion. Outside urban contexts, the perceived share is considerably higher. Estimates also suggest that a distortion exists with respect to the gap between highway tolls and infrastructure damage costs in Italy: trucks pay only a little more than marginal infrastructure costs they generate, so that only cars are actually paying for new investments.