TY - JOUR
T1 - Simultaneous optimization of multiple taxes on car use and tolls considering the marginal cost of public funds in Japan
AU - Kono, Tatsuhito
AU - Mitsuhiro, Yohei
AU - Yoshida, Jun
N1 - Funding Information:
This research was supported by the Ministry of Education, Culture, Sports, Science and Technology, which are gratefully acknowledged (Grant-in-Aid for Scientific Research B) 17H02517). We started an earlier version with the late Hisa Morisugi. We are grateful to Hisa Morisugi, Motohiro Sato, Yukihiro Kidokoro, Yuichiro Yoshida and anonymous referees for their useful comments. Despite assistance from many sources, any remaining errors in the paper are the sole responsibility of the authors.
Publisher Copyright:
© 2020, Japanese Economic Association.
PY - 2021/4
Y1 - 2021/4
N2 - We simultaneously optimize multiple tax instruments (fuel tax, car-ownership tax, and tolls) when these instruments are used as public funds with distortionary labor tax, accounting for pollution, congestion, accident externalities, and fiscal constraints of the tax-related agency and the toll-collecting agency. We quantitatively optimize taxes and tolls using parameters for Japan under three scenarios: (1) imposition of peak and off-peak tolls at different rates and simultaneous optimization of all tax instruments; (2) optimization of only car-related taxes without consolidation of the toll-collecting agency’s fiscal constraints; (3) optimization of only fuel tax. We find that peak toll and fuel tax should be higher, and off-peak toll and car-ownership tax should be lower than the current rate under Scenario 1. Scenarios 1 can improve welfare by 1000 to 2400 dollars/car, and Scenarios 2 and 3 can achieve more than 90% and 20–60% of the welfare gain in Scenario 1, respectively.
AB - We simultaneously optimize multiple tax instruments (fuel tax, car-ownership tax, and tolls) when these instruments are used as public funds with distortionary labor tax, accounting for pollution, congestion, accident externalities, and fiscal constraints of the tax-related agency and the toll-collecting agency. We quantitatively optimize taxes and tolls using parameters for Japan under three scenarios: (1) imposition of peak and off-peak tolls at different rates and simultaneous optimization of all tax instruments; (2) optimization of only car-related taxes without consolidation of the toll-collecting agency’s fiscal constraints; (3) optimization of only fuel tax. We find that peak toll and fuel tax should be higher, and off-peak toll and car-ownership tax should be lower than the current rate under Scenario 1. Scenarios 1 can improve welfare by 1000 to 2400 dollars/car, and Scenarios 2 and 3 can achieve more than 90% and 20–60% of the welfare gain in Scenario 1, respectively.
KW - Car-ownership tax
KW - Externality
KW - Fuel tax
KW - Marginal cost of public funds
KW - Optimal taxation
KW - Toll
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U2 - 10.1007/s42973-019-00029-4
DO - 10.1007/s42973-019-00029-4
M3 - Article
AN - SCOPUS:85077067012
SN - 1352-4739
VL - 72
SP - 261
EP - 297
JO - Japanese Economic Review
JF - Japanese Economic Review
IS - 2
ER -