Abstract
Taxes on gasoline and diesel reduce vehicle travel by making driving more expensive, which is known as the price effect. But fuel tax revenue is used to build and widen urban highways, inducing more driving, which is the capacity effect. We have shown that in the United States, the capacity effect from 1981 to 2021 was more than five times greater than the price effect. As the rise of electric vehicles forces policymakers to consider replacing or supplementing fuel taxes, our findings highlight the need to decouple the two functions—revenue and environmental—of taxes on driving. The use of gasoline taxes to fund highway capacity expansion undermines their environmental role.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
