Towards Green Driving - Income Tax Incentives for Plug-in Hybrids

48 Pages Posted: 23 Mar 2023 Last revised: 24 Aug 2023

See all articles by Henning Giese

Henning Giese

Paderborn University; TRR 266 Accounting for Transparency

Svea Holtmann

University of Mannheim - Accounting and Taxation

Date Written: March 20, 2023

Abstract

Fostering green driving has the potential to reduce the high CO2 emissions in the transportation sector. We investigate a German policy reform in 2019 that provided preferential tax treatment for hybrid company cars and evaluate the effectiveness and efficiency of the reform. Using a difference-in-differences design, we find that the tax benefit increased the number of newly registered eligible hybrid cars, compared to noneligible cars in Germany and pseudo-eligible hybrids in Austria. We find additional evidence for the effectiveness of the reform by comparing the German and the Austrian car markets in a triple-difference-in-differences setting. While the reform did help foster green driving, it was rather cost-inefficient, compared to other policy measures aiming to reduce CO2 emissions. Conducting a cost-benefit analysis, we find that the cost per saved ton of CO2 was 682€.

Keywords: green taxes, e-mobility, tax incentives

JEL Classification: H24, Q53, R41

Suggested Citation

Giese, Henning and Holtmann, Svea, Towards Green Driving - Income Tax Incentives for Plug-in Hybrids (March 20, 2023). TRR 266 Accounting for Transparency Working Paper Series No. 118, 2023, Available at SSRN: https://ssrn.com/abstract=4394968 or http://dx.doi.org/10.2139/ssrn.4394968

Henning Giese (Contact Author)

Paderborn University ( email )

Warburger Str. 100
Paderborn, 33098
Germany

TRR 266 Accounting for Transparency ( email )

Warburger Straße 100
Paderborn, 33098
Germany

Svea Holtmann

University of Mannheim - Accounting and Taxation ( email )

Mannheim, 68131
Germany

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