Discussion Paper on the Environment and Automotive Tax Structure

Discussion Paper on the Environment and Automotive Tax Structure

  • Submitted By: FrancesiTa
  • Date Submitted: 11/17/2008 7:35 AM
  • Category: Business
  • Words: 2067
  • Page: 9
  • Views: 1243

Discussion Paper on the Environment and Automotive Tax Structure

APEC Auto Dialogue
Environment Working Group

Significant influence of tax structure on the environment:

In addition to revenue gathering, tax policies generally operate in two different ways, to either encourage or discourage behavior. In automotive policy they can be used to encourage consumers to purchase certain vehicles with certain characteristics through tax rebates, or to discourage behavior through various types of taxes. Taxes can be designed to have a direct environmental impact, or designed with several policy goals in mind, and thus may have an indirect environmental impact.

As vehicle technology, engine technology and fuel types advance, governments will need to carefully consider the most appropriate types of taxation policies to apply in order to reach their desired goals.

The most effective way to reduce emissions, including CO2, is to form a tax structure that creates positive incentives to the market participants (consumers and manufacturers) to move towards emission reduction. The methods include alternative fuel incentives or incentives for low emissions, and taxation system that reduce tax burdens on higher environmental performance.

To follow is a short summary of various environmental taxation policies found in APEC member economies. This paper is not meant to provide a comprehensive listing of all such policies in APEC, or list all the economies that apply these methods, but rather outlines the more common environmental tax policies in the region. The paper also includes some policies found in the European Union for illustrative purposes.

To encourage behavior/incentive based system:

Economies can use tax structures to encourage a shift towards a desired behavior. For example, many countries have adapted tax policies as an interim measure to encourage a shift from leaded to unleaded gasoline (i.e. the price of unleaded gasoline is made lower...

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