The Impact of car Taxation on Carbon Dioxide Emission in Selected Countries of the European Union

Nassiri Aghdam, Ali; Abdollah Milani, Mahnoosh; Yeganeh Siahkal, Samere

doi:10.22054/eenr.2019.12484

The Impact of car Taxation on Carbon Dioxide Emission in Selected Countries of the European Union

Document Type : Research Paper

Authors

Ali Nassiri Aghdam ¹

Mahnoosh Abdollah Milani ²

Samere Yeganeh Siahkal ³

¹ Assistant Professor, Department of Planning and Economic Development, Faculty of Economics, Allameh Tabataba'i University, Tehran, Iran

² Associate Professor, Theoretical Economics Department, Faculty of Economics, Allameh Tabataba'i University, Tehran, Iran

³ Researcher, MA in Environmental Economics, Faculty of Economics, Allameh Tabataba'i University, Tehran, Iran

10.22054/eenr.2019.12484

Abstract

One of the most important greenhouse gases is CO₂. Based on statistical evidence, the transport sector has a remarkable contribution to CO₂ emission. Vehicle taxation is basically regarded as a tool which may control CO₂ emissions. Theoretically, car taxation inclines consumers’ interest towards purchasing less-polluting vehicles with less tax burden. However, empirically the question arises as whether vehicle taxes could combat carbon dioxide emission and if so which form of veicle taxes would be the most effective one? In this paper, by using the panel data method, the impact of car acquisition and ownership taxes on carbon dioxide emissions of new cars is studied in the 14 member countries of the European Union over 2007 to 2012. The results suggest that implementating these two types of taxes has a significant and negative impact on CO₂ emission, provided that CO₂ parameter included in the tax base. Furthermore, the simultaneous implementation of these taxes could be more effective in reducing CO₂ emission produced by cars.

Keywords

Car Acquisition Tax

Car Ownership Tax

CO2 Emission

Transportation