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Distortionary Company Car Taxation: Deadweight Losses Through Increased Car Ownership

Tinbergen Institute Discussion Paper 11-100/3

25 Pages Posted: 22 Jul 2011  

Jos N. van Ommeren

VU University Amsterdam - Faculty of Economics and Business Administration; Tinbergen Institute - Tinbergen Institute Amsterdam (TIA)

Eva Gutierrez-i-Puigarnau

CPB Netherlands Bureau of Economic Policy Analysis; VU University Amsterdam

Date Written: July 17, 2011

Abstract

We analyze the effects of distortionary company car taxation through increased household car ownership for the Netherlands. We use several identification strategies and demonstrate that for about 20 percent of households company car possession increases car ownership. The annual welfare loss of distortionary company taxation through increased car ownership is generally rather small, maximally €120 per company car, and likely much less. However, for policies that exempt households from paying tax on their company car, the annual deadweight loss is likely higher.

Keywords: fringe benefits, taxation, company car

JEL Classification: D12, D61, J33, R41, R48

Suggested Citation

van Ommeren, Jos N. and Gutierrez-i-Puigarnau, Eva, Distortionary Company Car Taxation: Deadweight Losses Through Increased Car Ownership (July 17, 2011). Tinbergen Institute Discussion Paper 11-100/3. Available at SSRN: https://ssrn.com/abstract=1891865 or http://dx.doi.org/10.2139/ssrn.1891865

Jos N. Van Ommeren (Contact Author)

VU University Amsterdam - Faculty of Economics and Business Administration ( email )

De Boelelaan 1105
Amsterdam, 1081HV
Netherlands

Tinbergen Institute - Tinbergen Institute Amsterdam (TIA) ( email )

Gustav Mahlerplein 117
Amsterdam, 1082 MS
Netherlands

Eva Gutierrez-i-Puigarnau

CPB Netherlands Bureau of Economic Policy Analysis ( email )

Van Stolkweg 14
The Hague, ND 2585 JR
Netherlands

VU University Amsterdam ( email )

De Boelelaan 1105
Amsterdam, ND North Holland 1081 HV
Netherlands

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