NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Albert K.C. Tsui

National University of Singapore

NBER Working Papers and Publications

May 2001Ownership and Use Taxes as Congestion Correcting Instruments
with Ngee-Choon Chia, John Whalley: w8278
In countries, such as Singapore, that have implemented vehicle congestion policies, recent years have seen a shift towards motor vehicle taxes based on car use. Ownership taxes reduce the number of cars on the road, leaving the price per trip largely unaffected. Use taxes such as fuel taxes and road use charges decrease the price of trips without necessarily penalising vehicle ownership per se. This paper presents a simple general equilibrium model involving trips from residential areas to a central business district, along with modal choice between cars and public transit. Car trips involve fixed costs but have lower variable costs per trip (including convenience costs) then bus trips. Using a calibrated numerical model, we investigate the relative merits of ownership and use taxes. We co...
 
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