What Drives Gasoline Taxes?

35 Pages Posted: 14 Jan 2010

See all articles by Fay Dunkerley

Fay Dunkerley

KU Leuven - Department of Economics

Amihai Glazer

University of California, Irvine - Department of Economics

Stef Proost

KU Leuven - Department of Economics

Date Written: January 2010

Abstract

Gasoline taxes are the most important tax on car use. The question naturally arises as to what tax would be adopted by a government that responds to the preferences of the public. To address that issue, we begin with the standard Downsian model, where policy is determined by the median voter. This model predicts that as long as the median voter is not a car user, he wants high taxes on road use and a road capacity that maximizes net tax revenues. When he becomes a driver himself, he wants road user taxes that are lower and only increase to control congestion, as well as more road capacity. We then use panel data for 28 countries and find support for our theory. When the median voter becomes a driver, the gasoline tax drops on average by 20%.

Keywords: gasoline taxes, median voter theory, political economy

JEL Classification: H23, R48, Q48, L98, Q52

Suggested Citation

Dunkerley, Fay and Glazer, Amihai and Proost, Stef V., What Drives Gasoline Taxes? (January 2010). Available at SSRN: https://ssrn.com/abstract=1536461 or http://dx.doi.org/10.2139/ssrn.1536461

Fay Dunkerley (Contact Author)

KU Leuven - Department of Economics ( email )

Leuven, B-3000
Belgium

Amihai Glazer

University of California, Irvine - Department of Economics ( email )

3151 Social Science Plaza
Irvine, CA 92697-5100
United States
949-854-6563 (Phone)
949-824-2182 (Fax)

Stef V. Proost

KU Leuven - Department of Economics ( email )

Leuven, B-3000
Belgium
016 32 66 35 (Phone)
016 32 67 96 (Fax)

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