The Efficient Combination of Taxes on Fuel and Vehicles

38 Pages Posted: 8 Feb 2018

See all articles by Geir H. Bjertnæs

Geir H. Bjertnæs

Statistics Norway - Research Department

Date Written: January 08, 2018


A tax on fuel combined with tax-exemptions or subsidies for purchase of fuel-efficient vehicles is implemented in many countries to reduce greenhouse gas emissions and other negative externalities from road traffic. This study, however, shows that a tax on fuel should be combined with heavier taxation of fuel-efficient vehicles to curb externalities from road traffic. The tax on fuel is implemented to curb externalities linked to both consumption of fuel and road use. The heavier tax on fuel-efficient vehicles prevents that motorists avoid the road user charge on fuel by purchasing fuel-efficient vehicles.

Keywords: transportation, optimal taxation, environmental taxation, global warming

JEL Classification: H200, H210, H230, Q580, R480

Suggested Citation

Bjertnæs, Geir H., The Efficient Combination of Taxes on Fuel and Vehicles (January 08, 2018). CESifo Working Paper Series No. 6789. Available at SSRN:

Geir H. Bjertnæs (Contact Author)

Statistics Norway - Research Department ( email )

Kongens Gt. 6
PO Box 8131 Dep
N-0033 Oslo

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