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Vehicle Tax Design and Car Purchase Choices: A Case Study of Ireland
Author(s)
Date Issued
2019-06-29
Date Available
2020-08-12T10:53:43Z
Abstract
This paper utilises a difference-in-differences model to study the impact of a vehicle tax reform on purchasing choices over a period of 10 years. In line with many other European countries, on the 1st of July 2008 the motor taxation regime in the Republic of Ireland was reformed to try and stem rising CO2 emissions from the passenger car fleet. To achieve this, both vehicle purchase and circulation taxes switched from an engine capacity basis to a CO2 emissions rating per kilometre basis. The aim of this study is to quantify the effectiveness of this (and subsequent) vehicle policy changes at achieving this goal. Using a difference in differences quasi-experimental design, we attempt to recreate the missing counterfactual (in the absence of the policy change(s)) of vehicle purchasing patterns in Ireland using the trend in UK new passenger car emissions over the same period. The findings suggest that the initial taxation policy change reduced average rated CO2 emissions from new passenger cars by between 8 to 11 g CO2/km. Some subsequent policy changes, such as the introduction of a scrappage scheme in 2010 also had an impact at stimulating the purchase of lower-emitting vehicles. This effect however was achieved by a substantial switch towards diesel powered vehicles, with other consequences for the environment, and a significant drop in tax revenue for the exchequer.
Sponsorship
Science Foundation Ireland
Type of Material
Conference Publication
Publisher
European Council for an Energy Efficient Economy
Language
English
Status of Item
Peer reviewed
Conference Details
The 24th Annual Conference of the European Association of Environmental and Resource Economists, Manchester, United Kingdom, 26-29 June 2019
ISBN
978-91-983878-4-1
This item is made available under a Creative Commons License
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