Abstract
Pigouvian taxes are efficient - but unpopular among voters. Earmarking of revenues has been widely reported to increase support for taxes, but this practice represents a deviation from optimal policy design. This trade-off between efficiency and political feasibility is the inspiration for this paper's attempt to quantify the effect of earmarking on voter support for fuel tax rises. Another aim of the paper is to investigate why earmarking increases support. The study estimates models of voter preferences for fuel taxes based on data are collected through a choice experiment conducted on a sample of 1177 respondents representative of the Norwegian voter population, and fitted using logistic regression models. The results show that earmarking the revenues for environmental measures has a substantial effect on voter support for fuel tax increases, garnering a majority for increases of up to 20 per cent above present levels. Earmarking the additional revenue for income redistribution does not result in a majority for any increase. Further analysis indicates that a prime reason why earmarking for environmental measures is popular is that it increases the perceived environmental effectiveness of the tax, and hence its legitimacy as an environmental rather than a fiscal policy. (Author)
Citation Formats
Saelen, Haakon, and Kallbekken, Steffen.
A choice experiment on fuel taxation and earmarking in Norway.
Norway: N. p.,
2010.
Web.
Saelen, Haakon, & Kallbekken, Steffen.
A choice experiment on fuel taxation and earmarking in Norway.
Norway.
Saelen, Haakon, and Kallbekken, Steffen.
2010.
"A choice experiment on fuel taxation and earmarking in Norway."
Norway.
@misc{etde_1011177,
title = {A choice experiment on fuel taxation and earmarking in Norway}
author = {Saelen, Haakon, and Kallbekken, Steffen}
abstractNote = {Pigouvian taxes are efficient - but unpopular among voters. Earmarking of revenues has been widely reported to increase support for taxes, but this practice represents a deviation from optimal policy design. This trade-off between efficiency and political feasibility is the inspiration for this paper's attempt to quantify the effect of earmarking on voter support for fuel tax rises. Another aim of the paper is to investigate why earmarking increases support. The study estimates models of voter preferences for fuel taxes based on data are collected through a choice experiment conducted on a sample of 1177 respondents representative of the Norwegian voter population, and fitted using logistic regression models. The results show that earmarking the revenues for environmental measures has a substantial effect on voter support for fuel tax increases, garnering a majority for increases of up to 20 per cent above present levels. Earmarking the additional revenue for income redistribution does not result in a majority for any increase. Further analysis indicates that a prime reason why earmarking for environmental measures is popular is that it increases the perceived environmental effectiveness of the tax, and hence its legitimacy as an environmental rather than a fiscal policy. (Author)}
place = {Norway}
year = {2010}
month = {Jul}
}
title = {A choice experiment on fuel taxation and earmarking in Norway}
author = {Saelen, Haakon, and Kallbekken, Steffen}
abstractNote = {Pigouvian taxes are efficient - but unpopular among voters. Earmarking of revenues has been widely reported to increase support for taxes, but this practice represents a deviation from optimal policy design. This trade-off between efficiency and political feasibility is the inspiration for this paper's attempt to quantify the effect of earmarking on voter support for fuel tax rises. Another aim of the paper is to investigate why earmarking increases support. The study estimates models of voter preferences for fuel taxes based on data are collected through a choice experiment conducted on a sample of 1177 respondents representative of the Norwegian voter population, and fitted using logistic regression models. The results show that earmarking the revenues for environmental measures has a substantial effect on voter support for fuel tax increases, garnering a majority for increases of up to 20 per cent above present levels. Earmarking the additional revenue for income redistribution does not result in a majority for any increase. Further analysis indicates that a prime reason why earmarking for environmental measures is popular is that it increases the perceived environmental effectiveness of the tax, and hence its legitimacy as an environmental rather than a fiscal policy. (Author)}
place = {Norway}
year = {2010}
month = {Jul}
}