This paper develops and implements an analytical framework for estimating optimal taxes on thefuel use and mileage of heavy-duty trucks, accounting for external costs from congestion, accidents,pavement damage, noise, energy security, and local and global pollution. The analysis allows forendogenous fuel economy, increased auto travel (and externalities) in response to reduced truckcongestion, and it distinguishes driving by truck type and region. We estimate the optimal (second-best)diesel fuel tax is $1.12 per gallon, and implementing it increases welfare by $1.34 billion per annum.However, optimizing over both fuel and mileage taxes, and differentiating mileage taxes by vehicle typeand region, yields progressively higher welfare gains. The most efficient tax structure involves a dieselfuel tax of 69 cents per gallon and charges on trucks that vary between 7 and 20 cents per mile;implementing this tax structure yields welfare gains of $2.06 billion.
How Should Heavy-Duty Trucks Be Taxed?
Working Paper by Ian Parry — 1 minute read — April 27, 2006Download
Journal Article — Apr 24, 2007
How Should Heavy-Duty Trucks be Taxed?
Issue Brief — Jul 29, 2021
Evaluation of Power Sector Emissions Reduction Pathways
RFF, with support from the REBA Institute, analyzes decarbonization policy pathways for the power sector through RFF’s advanced power sector model, E4ST.
Working Paper — Jul 21, 2021
Smart Thermostats, Automation, and Time-Varying Prices
This study evaluates an experiment in which randomly encouraged households activate a smart-thermostat feature that automates responsiveness to time-of-use electricity pricing.