Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Long-term fiscal sustainability... -- Luisa Dressler, OECD

19 views

Published on

This presentation was made by Luisa Dressler, OECD, at the Introductory Workshop on Green Budgeting Tools held at the OECD, Paris, on 29 April 20

Published in: Government & Nonprofit
  • Be the first to comment

  • Be the first to like this

Long-term fiscal sustainability... -- Luisa Dressler, OECD

  1. 1. Tax revenue implications of decarbonising road transport Paris Collaborative on Green Budgeting – 2nd Green Budgeting Experts Meeting “Session 4: Long-term fiscal sustainability” OECD Conference Centre, Paris 29th April 2019 Luisa Dressler Centre for Tax Policy and Administration, OECD
  2. 2. 1. Introduction: Tax revenue in road transport 2. The low-carbon transition: a risk to the sustainability of government budgets? 3. Case Study: Scenarios for Slovenia 4. Main findings and policy recommendation Outline 2
  3. 3. Potential tax base erosion in the transport sector 3 The road transport fuel tax base could erode. Eroding tax bases may put stress on government budgets Need to anticipate the potential decline of fuel tax revenues and decide whether and how to respond. • How could tax revenue from transport fuels evolve over time as vehicles rely less on fossil fuels? • How could the tax system respond to declining revenues?
  4. 4. Revenue impacts from technology changes and potential tax policy responses 4 OECD/ITF (2019) “Tax revenue implications of decarbonising road transport” – analyses the revenue implications of potential reductions of fuel consumption in road transport, under specific technology scenarios – develops a data-driven simulation tool to track the evolution of tax bases and revenues over time – investigates potential tax policy responses assuming that the objective is to maintain total tax revenue associated with road transport OECD/ITF (2019), Tax revenue implications of decarbonising road transport: Scenarios for Slovenia, OECD Publishing, Paris, https://doi.org/10.1787/87b39a2f-en (forthcoming). Planned launch date: 22 May 2019 at Annual Summit of ITF – The tool is kept flexible to allow similar (or extended) analysis to a wider set of countries and regions. It can be adjusted to handle data sources of different granularity and varying tax policy questions. – In-depth analysis for Slovenia
  5. 5. First case study: Scenarios for Slovenia 5 Scope: – Republic of Slovenia (2017-2050) using micro- and administrative data • In 2016, 14.6% of total tax revenue collected at the central government level in Slovenia came from excise duties and carbon taxes levied on diesel and gasoline used in road transport – Three tax bases in the transport sector are considered: fuel use, vehicle stock, distances driven – Tax policy simulations: • Baseline: current fuel and carbon taxes, vehicle taxes, vignettes and tolls in Slovenia • Tax reform simulations: increasing fuel and carbon taxes, adapting vehicle taxation, extending and improving distance-based charging – Main scenario for technology development: IEA “2°C Scenario for Europe” • Scenario analysis provides a plausible narrative about potential tax base developments; no predictive intent
  6. 6. Main findings and policy recommendations (1) 6 Total tax revenues from fuel used in passenger cars in Slovenia would drop by 56% between 2017 and 2050 if demand for cars and car use develops as expected. (This assumes that fuel-efficiency improves in line with European standards until 2030 and that alternative fuel technologies account for roughly 60% of new passenger car purchases in 2050 in line with the IEA 2°C scenario.) The picture for trucks is different, with a less pronounced drop in fossil fuel use over the 2050 horizon (due to a slower expected take-up of alternative technologies). Furthermore, Slovenia’s current toll system for trucks provides an effective means to raise revenue independently of fuel use. Under current policies, tax revenues from diesel and gasoline use in private cars are likely to decline substantially in the coming decades in Slovenia.
  7. 7. Fuel tax revenue from passenger cars is expected to drop in Slovenia 7 0 200 400 600 800 1000 1200 2017 2020 2025 2030 2035 2040 2045 2050 0 200 400 600 800 1000 1200 2017 2020 2025 2030 2035 2040 2045 2050 Passenger cars Trucks 0 2017 2020 2025 2030 2035 2040 2045 2050 Excise duty (incl. additional taxes) Toll income Carbon tax Motor vehicle tax Registration tax Tax revenue from passenger cars and trucks for the baseline scenario, 2017-2050 Source: OECD/ITF (2019), Tax revenue implications of decarbonising road transport: Scenarios for Slovenia, OECD Publishing, Paris.
  8. 8. Main findings and policy recommendations (2) 8 Fuel tax revenues from private cars erode gradually over time, which leaves leeway to adapt tax policy. For example, a relatively modest charge on all kilometres driven on Slovenian motorways that gradually increases over time can cover the revenue loss from fuel taxes on passenger cars. Early preparation for tax reform and a gradual implementation will reduce the risk of disruption. It will also create room for carefully designing policies, tailoring communication and developing the necessary accompanying measures. Accompanying measures could encourage the development of alternative travel modes, such as public transport, or take the form of support to those households that are affected disproportionally by the reform in the short run, but cannot easily adapt to the reform due to budget constraints. Gradually reforming the tax system, starting now, allows for a smooth adaptation to technological changes in the vehicle fleet and the timely implementation of accompanying measures.
  9. 9. Tax reform simulation: distance-based charges 9 2020 2025 2030 2035 2040 2045 2050 Fuel tax revenue loss from cars for IEA 2DS (million EUR) 47.6 112.5 186.1 256.1 312.7 362.4 402.1 Km-equivalent; all car kilometres; any road (EUR per vkm) 0.0025 0.0057 0.0091 0.0123 0.0148 0.0168 0.0182 Km-equivalent; car and truck kilometres; motorway only (EUR per vkm) 0.0071 0.0158 0.0247 0.0330 0.0389 0.0433 0.0458 Kilometre tax equivalent to cover revenue loss from fuel taxes on passenger cars (2020-2050) (No differentiation along vehicle dimensions; no behavioural effects) Source: OECD/ITF (2019), Tax revenue implications of decarbonising road transport: Scenarios for Slovenia, OECD Publishing, Paris.
  10. 10. 10 Tax reform simulation: fuel and carbon tax increase ​ 24% 12% -2% -15% -26% -35% -42% ​ -6% -20% -33% -44% -53% -60% 0 100 200 300 400 500 600 700 800 900 1000 2017 2020 2025 2030 2035 2040 2045 2050 Reference Tax increase (no behavioural effects) Tax increase (incl. behavioural effects) Source: OECD/ITF (2019), Tax revenue implications of decarbonising road transport: Scenarios for Slovenia, OECD Publishing, Paris. Simulation of fuel and carbon tax revenue from passenger cars (2017-2050) (Fuel tax at Italian level; tax revenue in million EUR)
  11. 11. Main findings and policy recommendations (3) 11 In the long run, revenues can be sustained by gradually increasing fuel or carbon taxes (to cover the external costs closely related with fossil fuel use) and by phasing-in distance-based charges for cars (to reflect external costs closely related with distances driven). An efficient distance-based system for passenger cars would provide a direct link to the amount of kilometres driven, instead of charging an all-you-can-drive access to the road network via the current vignette. The existing distance-based charging systems for trucks could raise revenue and manage external costs (congestion, air and noise pollution) more efficiently by differentiating rates by time and place. Revenue raising is only one objective of a fair and efficient road transport tax policy. – Efficiency considerations imply aligning tax rates with external costs closely related to vehicle, fuel use and road use. – Options for tax reform outside the road sector may further improve the efficiency of the overall tax system. Shifting from taxes on fuels to taxes on distances driven can contribute to more sustainable tax policy over the long term, improving environmental and mobility outcomes at the same time.
  12. 12. Luisa Dressler Economist, Tax and the Environment Centre for Tax Policy and Administration, OECD 2, rue André Pascal - 75775 Paris Cedex 16 Luisa.Dressler@oecd.org www.oecd.org/ctp || @OECDtax Thank you for your attention
  13. 13. Back-up: Main technology scenario (model input) 13 0% 20% 40% 60% 80% 100% 2017 2020 2025 2030 2035 2040 2045 2050 FCEV BEV PHEV Diesel Petrol 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2017 2020 2025 2030 2035 2040 2045 2050 FCEV BEV PHEV Diesel CNG/LPG Source: OECD/ITF (2019), Tax revenue implications of decarbonising road transport: Scenarios for Slovenia, OECD Publishing, Paris. Alternative fuel vehicles in new vehicle sales, 2017-2050 (Based on IEA 20C scenario) 0 200 400 600 800 1000 1200 2017 2020 2025 2030 2035 2040 2045 2050 0 200 400 600 800 1000 1200 2017 2020 2025 2030 2035 2040 2045 2050 Passenger cars Trucks 0 2017 2020 2025 2030 2035 2040 2045 2050 Excise duty (incl. additional taxes) Toll income Carbon tax Motor vehicle tax Registration tax

×