DOES VEHICLE TAXATION IMPACT VEHICLE OWNERSHIP?

This paper is concerned with assessing the impact of vehicle taxes on vehicle ownership rates. As the debate on the appropriate levels of transport pricing has progressed, the primary concern has been to identify the externalities associated with transport and to assess their magnitude. Less visible in this literature has been an analysis of the degree to which vehicle taxes (the presumed method of internalizing transport externalities) actually impact transportation demand. The current paper assesses the degree to which current levels of vehicle taxes, which vary by country, actually impact car ownership. This study found a clear and significant relationship between vehicle taxes and levels of car ownership in a sample of 17 countries, including 15 European countries, the United States, and Japan. While the results imply that vehicle taxes can be used as an effective tool to moderate car ownership, the impact on actual vehicle miles driven would require a more detailed analysis