Passenger Road Transport During Transition and Post-transition Period: Residential Fuel Consumption and Fuel Taxation in the Czech Republic

Abstract

The main trends in the determinants of residential motor fuel consumption during the transition and post-transition period in one former centrally-planned country, the Czech Republic, are examined. We show that passenger car ownership in Czech households has been increasing and that these cars are increasingly equipped with stronger engines. However, the age structure of the fleet has not changed as much. The environmental burden has therefore increased, mainly due to increasing domestic car ownership and the vehicles’ technical attributes. Richer and larger households, households with children, and those living in smaller rather than larger cities are the household segments with larger passenger car penetration, and toward which a policy maker might specifically target a policy aimed at changing transportation patterns. Interestingly enough, expenditures on motor fuel showed less change during the analyzed period 1993–2009, and on average remained relatively the same across all income deciles. Fuel taxation, as measured by the Suits and the Jinonice indexes, was quite even too, and this might lead one to conjecture about an even rather than an uneven effect of further fuel taxation across income deciles. Indeed, utilizing a micro-simulation model embodied with price and income responses of fuel demand as estimated for several household segments, we support this conjecture. However, our conclusion about relatively even distribution of the burden from higher fuel taxation across Czech households does not hold, if we analyze the incidence for household segments as defined according to several transportation-relevant household and housing characteristics. Should certain differences due to higher fuel pricing across household segments appear, the overall effect of quite large fuel price increases would be relatively small and the effect on distribution would not be large either. Identifying a household segment that would be affected relatively more even after recycling revenues, we recommend targeting mitigating measures to households of pensioners and families with children and those living in smaller towns or villages.