Although fuel taxes are a practical means of curbing vehicular air pollution, congestion, and accidents in developing countries—all of which are typically major problems—they are often opposed ondistributional grounds. Yet few studies have investigated fuel tax incidence in a developing country context. We use household survey data and income-outcome coefficients to analyze fuel tax incidence inCosta Rica. We find that the effect of a 10 percent fuel price hike through direct spending on gasoline would be progressive, its effect through spending on diesel—both directly and via bus transportation—would be regressive (mainly because poorer households rely heavily on buses), and its effect through spending on goods other than fuel and bus transportation would be relatively small, albeit regressive.Finally, we find that although the overall effect of a 10 percent fuel price hike through all types of direct and indirect spending would be slightly regressive, the magnitude of this combined effect would be modest. We conclude that distributional concerns need not rule out using fuel taxes to address pressing public health and safety problems, particularly if gasoline and diesel taxes can be differentiated.
What Does an Electric Vehicle Replace?
Vehicles replaced by EVs are relatively fuel-efficient.
Workshops & Seminars
New Research Questions on Electricity, Transportation, and Carbon Markets: What Stands in the Way Becomes the Way
The Effect of Fuel Economy Standards on New Vehicle Sales
Using a new modeling method, I find that fuel economy standards have a modest effect on new vehicle sales. The method can be applied to perform cost-benefit analysis of the standards.