[pp.81-86]

Analyzing the Environmental Effect of Greening the Automobile Tax System in Consideration of Consumers' Preferences

Yoshikuni YOSHIDA and Ryuji MATSUHASHI （The University of Tokyo）

Abstract:
We developed a car-type preference model based on a detailed database of passenger car sales and characteristics from 2002 to 2004. The market share for an individual car model is estimated in the form of a multinomial logit. The explanatory variables include previous year’s sales, a new-model dummy, annual cost, and interior volume. The created model enables the estimation of the CO2 emission reduction resulting from green taxation. Simulation results show that the current green taxation is not effective for reducing CO2 emissions since the tax reduction is limited to only two years and car owners cannot reduce their annual costs. Green taxation, however, can be effective if the system is appropriately designed. According to the model, if the tax is established in proportion to fuel efficiency and is valid for the lifetime of a car, the estimated reduction in CO2 emissions reaches 14 percent in 2004, including the effect of the regulation of the fuel-efficiency standard. Another merit of green taxation is that it is compatible with fuel efficiency standards. The reduction of CO2 emissions resulting from both policies almost equals the sum of the estimated separate reductions of CO2 emissions for each policy.

Key Word:
green taxation, preference, automobile tax, logit model, fuel efficiency, CO2 emission

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