Edited by Janet E. Milne and Mikael S. Andersen
Chapter 16: Structuring road transport taxes to capture externalities: a critical analysis of approaches
The importance of the transport sector and the negative externalities it generates undoubtedly justifies the growing attention it has been attracting in terms of economic policy. Intensive use of the different means of transport (road, air, sea and rail) is associated with burgeoning environmental problems, heightened congestion situations and higher accident rates. More precisely, road transport contributes significantly to these increasing problems, given its notable weight in the formation and evolution of external costs in terms of GDP (Schreyer et al. 2004; European Commission 2007; Litman 2009). The OECD’s recent studies on Central and Eastern Europe estimate that total external road transport costs account for close to 14 percent of the GDP of the countries in these areas (OECD 2003). It is widely accepted that the presence of negative externalities means a divergence between social costs and private costs that results in suboptimal activity levels (Proost and Van Dender 1999; Borger and Proost 2001) and the need to apply corrective policies to the sector (European Commission 1995; Oberholzer-Gee and Weck-Hannemann 2002).
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