University of Twente Student Theses


What is known about the influence of CO2 differentiated vehicle taxes on car sales in the EU?

Smit, T.G.J (2016) What is known about the influence of CO2 differentiated vehicle taxes on car sales in the EU?

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Abstract:The transport sector causes a big impact on the environment, and more than 50% of the emission in this sector is caused by passenger cars. The amount of passenger cars has been increasing the last decades, so governments have tried to find ways to decrease average emissions. In the European Union, as well as worldwide, goals have been set to reach a maximum average emission per car (e.g. 120g CO2/km by 2012). However these goals would be difficult to reach without big interference in the market. Governments adapted tax systems in order to stimulate lower average emission cars by making the systems CO2-based. This paper investigates what is known about the effect of the differentiation towards CO2-based systems on the car market in the European Union. Current literature on the subject is mainly country based; this paper aims to fill a gap by providing an overview of all the literature on the effects in Europe. The results should help reviewing the results in Europe, and present a clear overview of knowledge to work further with. The main tax tools and incentives are VRT, AMT, fuel tax, CCT, and vehicle scrappage incentives. With these governments have tools to affect the car market, however high costs are involved for small reductions in average emission. The trend towards bigger, faster and heavier cars is reversed with the introduction of CO2 based taxes and the average CO2 emission decreased. Furthermore CO2 based tax systems can cause fuel swapping, lowering the emission of CO2 but increasing other pollutants with high health related risks. Scrappage schemes do not work for emission reduction, however are good tools to stimulate the car industry. In and export of vehicles cause subsidies to flow away so governments might have to adapt tax systems also for the second-hand market. Lastly the current literature shows no short term reaction of manufacturers to certain thresholds set by governments.
Item Type:Essay (Master)
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:06 documentary information, 85 business administration, organizational science
Programme:Business Administration MSc (60644)
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