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Fuel Taxes and the Poor

Fuel Taxes and the Poor challenges the conventional wisdom that gasoline taxation, an important and much-debated instrument of climate policy, has a disproportionately detrimental effect on poor people. Increased fuel taxes carry the potential to mitigate carbon emissions, reduce congestion, and improve local urban environment. As such, higher gasoline taxes could prove to be a fundamental part of any climate action plan.

However, they have been resisted by powerful lobbies that have persuaded people that increased fuel taxation would be regressive - that they are more costly to the poor. But recent research suggests the opposite, particularly for developing countries. Reporting on examples of over two dozen countries, this book (published by RFF Press, Resources for the Future, with Environment for Development initiative) sets out to empirically investigate this claim.

The authors conclude that while there may be some slight regressivity in some high-income countries, as a general rule, fuel taxation is a progressive policy particularly in low income countries. Rich countries can correct for regressivity by cutting back on other taxes that adversely affect poor people, or by spending more money on services for the poor. Meanwhile, in low-income countries, poor people spend a very small share of their money on fuel for transport. Some costs from fuel taxes may be passed on to poor people through more expensive public transportation and food transport. Nevertheless, in general the authors find that gasoline taxes become more progressive as the income of the country in question decreases.

This book provides strong arguments for the proponents of environmental taxation. It has immediate policy implications at the intersection of multiple subject areas, including transportation, environmental regulation, development studies, and climate change.

Among the35 authors are 14 researchers from China, Central America, Ethiopia, Kenya, South Africa, Tanzania, USA and Sweden.

The editor Thomas Sterner is a Professor of Environmental Economics at the University of Gothenburg in Sweden and a University Fellow of Resources for the Future, Washington DC. He has published a dozen books and more than 75 journal articles.

Fuel Taxes and the Poor, The Distributional Effects of Gasoline Taxation and Their Implications for Climate Policy is edited by Thomas Sterner and published by RFF Press, Resources for the Future, with Environment for Development initiative.

Link to EfD webpage about the book: http://www.efdinitiative.org/research/publications/publications-repository/fuel-taxes-and-the-poor Link to Routledge webpage about the book: http://www.routledge.com/books/details/9781617260926/

Reference: Fuel Taxes and the Poor, The Distributional Effects of Gasoline Taxation and Their Implications for Climate Policy (2011) Published by RFF Press with Environment for Development initiative. Edited By Thomas Sterner. ISBN 978-1-61726-092-6

For more information, please contact: Thomas Sterner Telephone: +46 (0)31 786 1377 E-mail: Thomas.Sterner@economics.gu.se

idw :: 15.11.2011