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Should Carbon Taxes Be Additional to Other Transport Fuel Taxes?

If transport fuel is taxed as a method of charging for road use and congestion, then, as a first approximation, carbon taxes should be superimposed on the existing taxes and the final price of transport fuel should rise by somewhat more than the carbon tax. If transport fuels are already taxed, the cost of meeting the emissions target will depend sensitively on whether the reduction in CO2 emissions is a proportion from base levels or to a target level, depending on factors other than fuel consumption (GNP or population).

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Energy Specializations: Energy and the Environment – Policy and Regulation

JEL Codes:
E60 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook: General

Keywords: Carton tax, Transport fuel tax, CO2 emissions, externality

DOI: 10.5547/ISSN0195-6574-EJ-Vol13-No2-3

Published in Volume 13, Number 2 of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.