The effect of fuel taxation on consumers purchases

Last changed: 24 May 2021
Image of scientific poster. Author: Claudia Spanier

Claudia Spanier, Business and Economics - Sustainable Development

Summary

There is no doubt that climate change is becoming increasingly apparent. Forests are burning, ices are melting, and extreme weather has started to become the new normal. If the planet is to be saved, radical measures need to be implemented and there is no time to waste. This study evaluates how the Swedish taxation on gasoline and diesel has affected the demand for passenger cars driven by the different fuels. A fixed effect model has been applied on a panel dataset, with data on new registered cars for all 21 Swedish counties between the years 2006-2016. The results indicate that the taxation has been effective for altering consumers’ car choices and could thus contribute for increasing the possibility of reaching desired climate goals. However, despite Sweden’s ambitious climate actions, there is still room for improvements. One suggestion could be to tax fossil fuels based on the cars’ carbon emissions. Also, a high fuel taxation, together with subsidies and bonuses on green cars are necessary to change consumers car preferences, and in the bigger context, secure a future for coming generations.

Poster

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Image of scientific poster. Author: Claudia Spanier


About me

Claudia Spanier. Private photo.

Claudia Spanier

There is no doubt that climate change is becoming increasingly apparent. Forests are burning, ices are melting, and extreme weather has started to become the new normal. If the planet is to be saved, radical measures need to be implemented and there is no time to waste. This study evaluates how the Swedish taxation on gasoline and diesel has affected the demand for passenger cars driven by the different fuels. A fixed effect model has been applied on a panel dataset, with data on new registered cars for all 21 Swedish counties between the years 2006-2016. The results indicate that the taxation has been effective for altering consumers’ car choices and could thus contribute for increasing the possibility of reaching desired climate goals. However, despite Sweden’s ambitious climate actions, there is still room for improvements. One suggestion could be to tax fossil fuels based on the cars’ carbon emissions. Also, a high fuel taxation, together with subsidies and bonuses on green cars are necessary to change consumers car preferences, and in the bigger context, secure a future for coming generations.

claudiaa.spanier@gmail.com

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