Fuel excise reform in Belgium

Abstract

This paper analyzes the long term effects on traffic, environmental quality and public finance of the planned reform of fuel excise duties in Belgium. We find that without measures to abate NOx emissions by euro 6 cars, the planned excise rate equalization would by 2030 diminish CO2 emissions by the transport sector by 0.5%, emissions of Particulate Matter by 0.6% and of NOx by 2.6%. This yields society an environmental benefit of 4.2 cents per euro of tax revenue raised, of which 2.7 cents are from lower local air pollution. The diesel reform will diminish time costs borne by users of transport by 32 cents per euro of tax revenue. An alternative congestion charge at peak period would yield 3 cents per euro of tax revenue in environmental quality of which 1.9 are due to lower air pollution. A congestion charge would yield time gains over the whole projection period amounting to 81 cents per euro. The difference in efficiency in tackling time costs between the excise reform and a congestion charge rises over time. Sensitivity analysis shows that if the new European standards in NOx emissions based on real driving tests are strictly imposed by 2020, the long-term gain in environmental welfare from the excise reform drops to 3.4 cents per euro of revenue raised. Jel Classification H21, H23, Q53, Q55, Q58

18 Figures and Tables

Cite this paper

@inproceedings{Steenbergen2015FuelER, title={Fuel excise reform in Belgium}, author={Alex Van Steenbergen and Philippe Donnay}, year={2015} }