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Equity effects of automobile taxation

Authors: Christian Steinsland, Vegard Østli, Lasse Fridstrøm
Report nr: 1463/2016
ISBN (digital version): 978-82-480-1692-2
Language: English
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With a focus on equity effects, three CO2 abatement measures bearing on automobile taxation have been studied by means of network travel demand models and a discrete choice model for vehicle purchase. The commuter tax credit in effect in Norway helps equalize welfare between low and high income communities. Revoking it would be a strongly regressive tax measure. Increasing the fuel tax would have similar, although not quite so strongly regressive effects. Higher toll rates and ferry fares also affect different population segments unequally, but in a way that has less to do with income than with geography per se. The vehicle purchase tax, on the other hand, is an effective instrument for long-term greenhouse gas reduction, without having obvious regressive effects. The same is true of the value added and purchase tax exemptions for battery electric vehicles. These tax incentives have allowed Norwegian consumers a large new assortment of relatively affordable vehicles – cars that are also quite economical in use, since battery electric vehicles are three to four times more energy efficient than conventional cars.


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