Thursday, November 19, 2009

Pigouvian tax on driving

From Deutsche-Welle (German newspaper), the Dutch government is imposing a new tax to replace current road taxes and auto sales taxes. The new system will impose a tax on each car based on distance driven. More fuel efficient cars will be taxed at a lower rate. Driving during congested periods will be taxed at a higher rate. How can they do it? GPS tracking. Interesting (and pretty solid IMO) application of Pigou ... but a bit scary in terms of, you know, the big brother implications.

What do you think?


Anonymous said...

Couldn't this be addressed by taxing gasoline? Drive in heavy traffic: burn more gas. Speed:burn more gas. Drive and SUV:burn more gas. The more gas you consumer the more you have to pay in gasoline tax. No invasion of privacy and it is very straight forward. Figure that the typical car in Holland (madeup number here) gets 30mpg, then add a tax of $2.25 to each gallon of gas. The same decrease in the amount of driving should decrease.
-Kyle Dexheimer

Anonymous said...

Thats what I was thinking, Couldn't it be addressed by taxing gasoline? It seems kind of pricey to go and install a GPS in cars that people allready own. I know the plan isnt so that the gv't can keep tabs on where every one is going, and they are just trying to decrease emmissions ect., but it seems a little invasive to me.
-Margaret Harding

Zach said...

This tax seems like it will be affecting the people that are working and cant afford fuel efficient cars. The people that are supporting the economy get taxed for working during business hours. This doesn't make sense.
John Gilstrap

Taber B. said...

I think this is actually a really good idea which could result in a positive outcome. It is sort of like the American waste problem. If people keep driving as much as they want, then there are marginal costs to themselves, but no marginal costs to society. With this new tax it will add a marginal cost to each mile they drive a day, on top of their private fuel and maintenance costs; which would create a huge incentive to drive less, and ultimately to not drive at all. Although I do think this tax could work and is a great idea, still at the same time it seems a bit communistic. If the government begins to control an individuals personal transportation, and ability to freely travel about the country through a tax system, then whats next? They may eventually try to control the amount an individual uses the bathroom each day in attempts to reduce waste. What if they began taxing you every time you took a poop, or peed???